Situations move N.Z. sharemarket

Press, 26 April 1982, Page 23

Situations move N.Z. sharemarket

Bv

ADRIAN BROKKING,

commercial editor

The dependence of the New Zealand' sharemarket at present on special situations was again amply demonstrated last week by the partial bid by Wattie Industries, Ltd, for Waitaki N.Z. Refrigerating, Ltd.

On Monday the N.Z.U. index gained almost 6 points, and the Watties offer added another 7.5 points on Tuesday. Then the market began to decline, and the index closed on Friday at 647.28 — 4.42 points above the previous Friday, but 1.55 points below Monday's closing level.

At the same time turnovers in the last three days of the week showed a steady decline, running at the levels of two weeks ago. Over the whole of the week rises and falls were about in balance, and most price changes were small. Only nine rises among New Zealand shares reached double figures, and these included Watties and Waitaki. Among the falls 12 issues declied 10c or more.

Few price changes stood out.

Because of the only-to-be-expected criticism of those Waitaki shareholders who missed out on the Watties offer, the whole issue of

stockmarket raids once again received an airing.

Naturally, the institutions — especially the life offices, came under fire. I find it hard to blame them too much: in this inflationary environment, and unable to maximise the return on about half their funds, they must take their profits where and when they can. What is wrong at present is the rules of the game. If we are to allow “first come, first served" bids, then the obvious consideration should be that everyone is treated equally, and should have an equal chance.

In this connection the most important factor to be considered is time. The directors of the target company should be allowed the time to get together and mobilise their defences and to issue a statement for their shareholders’ guidance. Shareholders equally should be given some time to make up thpir mind, and should not have to make a

snap decision on perhaps incomplete information. That is the reason why I suggested here on Saturday that such a bid should be made only on a Friday afternoon just before the stock exchanges close, and should take effect say no earlier than Tuesday at noon.

■ The announcement should also indicate what attitudes the institutions are taking. That would give directors the time to get together, and allow the time for all relevant information to be passed on at least through the news media.

Another anomaly is the limitation of a 24.9 per cent stake. It is- a very large foothold into a company without having to make an offer to all shareholders.

If this proportion is to remain, some scheme has to be devised by which all interested target company shareholders can offer their shares to the offeror company, and this company perhaps compelled to scale all acceptances down pro rata.