Good future seen for enlarged group

Press, 13 September 1982, Page 24

Good future seen for enlarged group

PA Auckland The Hamilton-based construction engineer. Hawkins Holdings. Ltd. is proposing to issue 16.375.000 ordinary 50c shares to acquire all the shares in McConnell Dowell, Ltd. and Arnot Hendry, Ltd.

On the last sale price of Hawkins shares, of 147 c. the share issue puts a market capitalised value on McConnell Dowell of just $24 million. The issue of 16.375,000 shares together with those already held, will result in Mr A. M. McConnell and Mr J. H. Dowell and their family interests between them holding 80.96 per cent of the shares in the enlarged company.

The proposal to issue the shares will be put to an extraordinary meeting of Hawkins’ shareholders on September 29. In a document outlining the merger proposals, Mr D. J. Braithwaite, deputy chairman of Hawkins, says the Hawkins board, with the exception of Messrs Dowell and Carpenter, who did not vote on the issue, unanimously recommended the proposal.

The Examiner of Commercial Practices has consented to the proposal and the Stock Exchange Association has confirmed that the shares in the enlarged company will retain listing. Mr L. R. Willis, an independent . Auckland chartered accountant specialising in company and share valuations. has made a comprehensive study of the proposed

merger, says the merger document. He concludes that the terms of the proposed merger are fair and reasonable to all parties. His summary of profit history of the two organisations shows Hawkins' tax-paid profit for the 1982 financial year before extraordinary items was $1,180,792, while that for McConnell Dowell was $3,440,520. For the previous financial year the figures were $391,790 and $1,766,735, respectively. Profit available to ordinary shareholders as a return on average ordinary shareholders’ funds was 20.08 per cent for Hawkins and 30.2 per cent for McConnell Dowell.

Mr Willis says that, whereas Hawkins suffered a profit reversal in the 1980 and 1981 years, the profit of McConnell Dowell has shown a steady improvement.

He adds that when the net profit is expressed as a return on total assets and bn shareholders' funds, McConnell Dowell has out-per-formed Hawkins over the past four years. In the 1982 financial year net profit before tax and interest to average total assets for Hawkins was 14.5 per cent. For McConnell Dowell it was 20.15 per cent. Mr Willis says he is of the opinion that the prospects for the enlarged group are no less favourable than they were for Hawkins shareholders before the amalgamation.

The international spread of McConnell Dowell's business had insulated it to a large extent against New Zealand fluctuations. An assessment of the future outlook for the enlarged enterprise signed by Messrs McConnell and Dowell, along with the managing director of Hawkins. Mr P. R. Wilson, says the combined group's current workload is high and prospects for some time ahead indicate a high level of activity-

The group is well placed on both sides of the Tasman and is regarded as being in a singularly good position to take advantage of opportunities presented by closer economic relations with Australia. Mr Willis says that the combined group would have had issued capital of 22.118,549 50c shares and shareholders’ funds of $21,917,184. There will be six directors on the board of the enlarged group.

They will be Mr D. J. Braithwaite, deputy chairman of Hawkins, Mr A. L. Carpenter, chairman of McConnell Dowell and a Hawkins director. Mr D. J. Chetwing, chief executive of McConnell Dowell, Mr J. H. Dowell. joint managing director of McConnell Dowell and a Hawkins director. Mr A. M. McConnell, joint managing director of McConnell Dowell, and Mr P. R. Wilson, managing director of Hawkins.