P. Impey in merger talks
p.\ Auckland Phillips and Impey, Ltd, the Auckland-based paint manufacturer and merchant, is holding merger talks with .James Hardie Industries, Ltd, of Australia, aimed at combining activities in New Zealand.
The two companies said the proposed merger, unlikely to be completed before the end of May, would.result in a significantly increased Phillips and Impey share capital, with James Hardie holding an estimated 70 per cent of the regrouped equity. A joint statement said it was envisaged that P. and I. would acquire Hardie’s major interests in New Zealand through an issue of shares or shares plus cash, although the ratio had not been settled.
Those interests included manufacture of fibre cement building products, pipes, electrical switch gear and heaters, the importation through Hardie Trading of raw materials for the paint industry, as well as machinery and industrial equipment, and marketing of wall covering, furnishing and car care products. The chairman and managing director of P. and I; (Mr S. C. Browning) said he was optimistic about the outcome of the negotiations, which began recently, and the company board was enthusiastic about the new venture.
“The enlarged group will have a strength and potential which P. and I. on its own could not emulate. The ac-
quisition of James Hardie’s profitable operations in businesses allied to our own can only be good for shareholders and employees alike,” he said.
The James Hardie managing director, Mr D. K. Macfarlane, said his company had. for a number of years, looked to the introduction of local equity in New Zealand. Profit from James Hardie's New Zealand interests contributed between SNZ4.S million and SSM to the Australian company in the year to March 31 last year, on net assets in New Zealand of about $3O million.
By comparison, Phillips and Impey with net assets of about SUM earned a record $1,366,296 in the year to August 31 on issued' capital of $2,554,776, before a one-for-five bonus issue. Before the announcement Phillips and Impey shares had sold before at 145 c, the 6,131,461 ordinary 50 shares having a market capitalisation of $8,951,933. James Hardie has about 80 million 100 c shares on issue in Australia, trading at 435 c. Depending on the terms of the acquisition, it was estimated P. and I. would be required to increase issued capital between 30 and 40 per cent. All aspects of the merger are subject to the consents of the Overseas Investment Commission, the Examiner of Commercial Practices, the Reserve Banks of New Zealand and Australia and the stock exchange.
Mr Macfarlane said he believed the significantly enlarged group would prosper, “particularly as the economy improves, as I am sure it -will over the next few vears.”
Hardie had a “most satisfactory” association with P. and I. through their joint manufacturing of “Polycell” handvman products in New Zealand — a link resulting from Hardie’s take-over of the large Australian cement and rebuilding group. Reid Consolidated Industries in 1978.
A merger was the best wav to achieve local equity in'New Zealand and was consistent with Hardie's policy in previous expansion in Malaysia and Indonesia, he said.
Hardie had been progressively "adding on” since its acquisition of R.C.I. and the merger with P. and I. was another add-on opportunity for both companies to expand in New Zealand. In Australia Hardie had clearly defined involvement in the housing, agriculture and food, and leisure markets and it was expected expansion could follow similar lines in New Zealand. While conceding that P. and L’s 29 retail hardware outlets would mesh neatly with its New Zealand marketing operation, he said more significant areas for expansion could lie with Hardie’s larger manufacturing lines such as irrigation systems.
Negotiations would concentrate on providing P. and
I. with the strongest gearing structure for future development.
Mr Browning said the regrouping would create a company of between 1300 and 1400 staff, compared to P. and L’s 430 existing employees. There was no overlapping of operations and the commonality of interests would ensure new opportunities for staff with no question of retrenchments or rationalisation.
There were many areas where the two operations would merge neatly. For instance. Hardie was an importer and 'wholesaler of wallpaper, while P. and I. was a wallpaper distributor, and there were other opportunities with Hardie’s building products division. The merger would also give P. and I. access to Hardie's technical expertise in Australia which could be applied in New Zealand. (James Hardie is one of Australia’s largest manufacturing companies with annual sales approaching SAIOOOM and a large share of the building products, paint, packaging and publishing markets, as well as an international leader in irrigation systems.) Hardie’s Rigby New Zealand publishing subsidiary is excluded from the merger. Mr Browning said he believed recent movements in P. and I. share price were not caused by prior disclosure of merger plans, nor was there anv protecting against a possible take-over.
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Press, 26 March 1981, Page 19
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817P. Impey in merger talks Press, 26 March 1981, Page 19
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