Brierley’s bids for investment company

Press, 11 January 1984, Page 1

Brierley’s bids for investment company

Business reporter

Brierley Investments, Ltd, which had gained some notoriety as a corporate raider or assetstripper, yesterday made a take-over offer for Bunting and Company, Ltd, the Christchurch-based company which is similarly involved in company restructuring.

The merger will make Brierley Investments the second biggest company listed on the Stock Exchange in New Zealand.

If the offer of nine Brierley shares for every 10 Bunting’s shares is successful, it will mean that the company will obtain big shareholdings in a number of leading New Zealand companies, including Winstone, Ltd, Odlins, Ltd, and DIC, Ltd. The offer requires the approval of the Examiner of Commercial Practices.

At Brierley’s sale price of 495 c on the New Zealand Stock Exchange it values each Bunting share at 445 c, 10c above the present market price. The value of the offer is about $ll6 million.

The two companies have more in common than just making big investments in other companies. Mr Bruce Judge, the executive behind many of Bunting’s investment decisions, was initially a protege of Mr Ron Brierley, founder of Brierley Investments.

Mr Judge was at one time company secretary for Brierley’s and was its executive director before leaving the company in 1979 to join forces with Mr C. L. Smith, the Christchurch businessman, in H. W. Smith, Ltd, the private Christchurch investment firm.

Through H. W. Smith, Ltd, a substantial shareholding was obtained in Bunting’s, and the company switched from brushmaking to corporate investment. Since then the involvement of Bunting’s in Christ-church-based companies has included the merger of Haywrights, Ltd, and New Zealand Farmers’ Co-operative Association of Canterbury, Ltd, the take-over of T. J. Edmonds, Ltd, and the merger of Andrews and Beaven, Ltd, into Repco Corporation NZ, Ltd.

Brierley has had a similar involvement with Christchurch companies, including the take-over of Whitcoulls, Ltd, restructuring Airwork, (N.Z.) Ltd, a-controlling interest in Quill Humphreys, Ltd, the Christchurch liquor

merchant, and at present has a take-over offer standing for Suckling Industries, Ltd, the Christchurch footwear manufacturer. Both Bunting’s and Brierley’s have similar corporate investment operations in Australia to what they run in New Zealand. Mr Brierley in particular has shaken up the Australian financial world through Industrial Equity, Ltd, (lEL) using similar tactics to those employed through Brierley Investments in New Zealand. However, for the moment at least, it would appear as though both lEL and Bunting’s Australian finance arm, Ariadne Australia, Ltd, will remain separate if the bid is successful. Executives of both companies yesterday emphasised the gains to be made if Brierley’s offer was successful.

“It is a bloody good deal for all concerned,” said Mr Ron Brierley last evening. The proposal was “tremendously desirable and satisfying.”

A lot of preparation had been made since November to evaluate a fair basis for the two companies to join forces in terms of their assets and what both had been doing.

It had become obvious that both companies would become more effective if they worked together rather than, as had happened sometimes in the past, in conflict, he said.

Mr Brierley said that relations with Mr Judge and Mr Paul Collins, Bunting’s managing director who also once worked for him, had remained amicable, “even though there were some tough and occasional conflicts.”

Interestingly, neither Brierley’s nor Bunting's appear to have clashed publicly over restructuring opportunities in either Australia or New Zealand in spite of being in the same business.

The decision to issue shares rather than cash for Buntings was most unusual, Mr Brierley said. “We normally would not do that. However, this is a genuine merger, not a takeover. It involves two similar companies with a similar background and mix of assets. We are looking at different sorts of criteria.” Mr Bruce Hancox, chief executive of Brierley's said the reason behind the bid was that “one and one made three.” The combined company would be far stronger than if the two companies remained separate, and it would provide bigger opportunities for growth. “It is a merger of interest and skills even though it is a take-over, because the companies will be looking at the advantage of management skills and investment opportunities together,” said Mr Hancox, in reference to the bid for each Bunting share being only 10c above the market price. On the Bunting’s side, Mr Judge said last evening that the merger offered enormous, exciting prospects. There was no doubt the two companies could perform better as a group. Mr Collins said that the bid solved problems of finding the right staff for Bunting’s particular style of work and it would enhance investment opportunities in New Zealand and overseas. If the offer is acceptable to Bunting’s shareholders it means that Mr Judge will return to the boardroom of Brierley Investments, as will Mr Collins.