Charter stake in S. Biolab

Press, 24 February 1986, Page 21

Charter stake in S. Biolab

PA Wellington The Wellington-based investor, Charter Corporation, has exercised an option agreement with AA Mutual Insurance to take an 11 per cent stake in the company to be formed from the Smith-Biolab, Ltd, Salmond Industries, Ltd, merger. Charter’s managing director, Mr Chris Castle, said that, under the option, Charter had bought from AA Mutual 1,480,456 shares in Smith-Biolab at 275 c each. The price was a premium of 10 per cent over the market price at the time the option was granted last October. He said Charter already

held about 430,000 SmithBiolab shares, so now its holding was 1,911,770 shares on 19.8 per cent of the issued capital. Charter also held a small shareholding in Salmond, and after the merger it would have 2,658,030 shares, or 11 per cent, of the new group. Mr Castle said his company had negotiated the option agreement because it had always been keen on Smith-Biolab, as evidenced by its 4.5 per cent shareholding before the latest move.

He said the merger with Salmond had Charter’s full support, and the directors considered it would have significant benefits for the shareholders of both companies. “Smith-Biolab is in particular a well-run company. The merger dilutes our shareholding but I think over all it will be a better company for it.” Despite paying a 10 per cent premium on October’s price, the option agreement has meant Charter has had a handsome, though unrealised, capital gain on the SmithBiolab investment. Since the news of the merger Smith-Biolab shares have risen to 340 c, 65c above what Charter has had to pay.