Commercial

Press, 23 October 1980, Page 18

Commercial

Challenge, Fletcher and Tasman will merge to create a corpora.e giant which will dominate many fields of New Zealand enterprise. Fletcher will also drop its attempt to trke over Carter Holt.

The move was expected in the commercial community, but the sc-pe of it was a surprise to many; in sharemarket trading on Monday Challenge shares sold up to 14c higher, Fletcher 9c, and Tasman 12c.

A new class of 50c shares is to be created. Challenge share-holders will receive 18 new shares for every nine existing shares, Fletcher shareholders, 23 new for every nine Fletcher held, and Tasman shareholders, 21 new shares for every nine held. When the news broke on the Stock Exchange yesterday morning trading in the three companies was briefly suspended, then resumed. The new company will be

a colossus with total sales of more than $2OOO million, profit of more than $BO million a year, and exports of more than $3BO million. In December, Fletcher will pay an interim dividend of 13.5 c a share, Tasman 10c a share and Challenge a special interim of 6c per share. All three companies will then have paid dividends to cover the period to September 30. The directors of Fletcher Holdings confirm that the recently-announced 1:7 renounccable cash offer of ordinary shares at 250 c a share to be made to shareholders of Fletcher Holdings on Holdings at October 31 has been withdrawn. The current public and conversion issues of debenture stock of Fletcher Holdings will continue to remain open for subscription until either fully subscribed or c’.:.:ed by the directors.

Subject to the consent of the Inland Revenue Department it is intended to substitute preference shares. in Fletcher Challenge, Ltd, in order to preserve rights of existing preference shareholders (both redeemable and specified) including the conversion terms of the specified preference shares. The share capital of the new group will be around SI42M —5103.5 M in ordinary shares and the balance in various classes of preference shares. . The Shareholdings of Fletchers and Challenge in ’ Tasman (together about 85. per cent of the Tasman capital) will be cancelled in the move. At leart 20,000 people will be employed throughout the

country. Total shareholders will be” more than 40,000. Challenge appears to have been a leader in the move to join forces, but it may also reflect the philosophy of the Managing director of Fletchers (*'■ Hugh Fletcher) who believes companies here need to be big into order to meet overseas large companies on equal terms. If the proposal for the merger receives all necessary consents — not yet certain — the next largest company in New Zealand would be NZ Forest Products, with annual sales of more than $4OO million, profit exceeding $29 million, 8500 staff, and 65,600 shareholders. Carter Holt’s joint managing director, Mr Richard Carter, suggested that the dropping of the Fletcher take-over bid for his company might have been a condition of .the three-company merger. “I suspected that as the date for the public inquiry approached there could be an attempt to withdraw,” he told reporters in Auckland. The newly-merged company will have interests in most areas of the economy. Challenge has operations in manufacturing, engineering, energy, motor vehicle retailing and servicing, forestry, agriculture. Tasman is the country’s largest producer of newsprint. Fletcher’s operations cover commercial construction and development, house building, forestry, building materials and merchandising, pulp and paper, fishing, agriculture.