Dunlop spells out offer

Press, 14 March 1985, Page 30

Dunlop spells out offer

PA Wellington The $3 cash offer by Dunlop Olympic, Ltd, of Australia, for the 16 per cent of Holeproof Industries, Ltd, is 55 per cent ahead of net asset backing at June 30, 1984.

It was also 30 per cent above the average price quoted on the Stock Exchange Uiis year, Dunlop said in a statement.

The offer price represents 14 times 1984 earnings per share. It values the outstanding 661,000 shares at SNZI.9BM. The shares are held by about 600 shareholders.

The offer is subject to approval by the Overseas Investment Commission. Last year, Dunlop Olympic, Ltd, bought out Dunlop New Zealand. The New Zealand resident directors on the Holeproof Industries board are seeking independent advice on the terms of the offer. The Australian resident directors who represent Dunlop Olympic, Ltd, will not participate in these discussions with the independent adviser.

Shareholders will be advised of the recommendation of the New Zealand directors once the independent advice was available, the directors said yesterday. Dunlop said its offer provided payment in excess of the market.

The last pre-bid market sale price was $2.60 cum the 6c interim dividend. The offer price of $3 provides a 45 cents per share increase in value. During 1984, the highest price at which the shares traded was $2.30. This year’s sales in January and February have been at $2.20 to $2.45. Since the announcement of February 22, 1985 of Holeproof Industries, Ltd, first half trading result, the sale of 4200 shares at prices from $2.55 to $2.60 has been reported. The offer of $3 a share compared with a net asset backing of $2.45 for Holeproof Industries shares at June 30, 1984, the Dunlop directors said. The offer price represented a multiple of 14 times last year’s earnings, they added. Based on sharebrokers Buttle Wilson and Company’s forecast

of the current year's earnings, the earnings multiple was 11. “This multiple should be compared with the average projected price earning multiple of 7.3 for all textile and apparel companies quoted on the Stock Exchange.”

Dunlop said that in the last decade Holeproof had sold to New Zealand interests its woollen yarn and fabric operations, men’s suits, shirts, women’s hosiery and, more recently, Jacquard Industries in Palmerston North. This process had aided rationalisation of the industry and increased New Zealand ownership.

The managing director of Dunlop Olympic, Mr John BGough, said the acquisition of the minority shareholding would allow greater flexibility to increase the scope of the company’s operations in New Zealand and export markets.

“Full ownership will enable the Holeproof operation to be aligned more closely to our Australian markets where we are the leaders in a wide range of similar products. This will have significant advantages for the New Zealand economy and future job opportunities,” Mr Gough said.