IEL Fairfax bid?

Press, 19 February 1987, Page 25

IEL Fairfax bid?

NZPA-AAP Sydney Industrial Equity, Ltd, may be planning a sAust2.2 billion ($NZ2.75 billion) take-over bid for John Fairfax, Ltd, according to brokers’ media analysts. They said that according to market speculation, lEL bought most of the 1.7 million Fairfax shares, representing 1.7 per cent of issued capital, sold on Australian sharemarkets on Tuesday. ’

Fairfax shares reached a record $2O before closing $2.30 higher at $19.80. Analysts said a $22 a share bid by lEL is the strongest rumour around the markets, but Bell Group Ltd, Elders IXL, Ltd, and TNT, Ltd, have been named possible suitors.

Most brokers, who last week said the company’s shares were undervalued, are now recommending

investors hold their stock for corporate developments. Mac Nab Clarke’s media analyst, Mr Charles Plumridge, said Elders cannot be ruled out as a suitor as it bid unsuccessfully for News Corp’s Channel 10 and is to raise S9OOM in a rights issue. McCaughan Dyson’s analyst, Ms Rosalie James, suggested Bell chief, Mr Robert Holmes aCourt, locked out of the major television networks being established, could be buying into Fairfax to extract assets from it. lEL executives were unavailable for comment, but generally decline to discuss market speculation. Ms James said investors would not be selling at today’s prices unless they believed someone wanted total or partial control.

Brokers Bain and Co.

says Fairfax is worth sAust3oooM, or $3O a share, if its assets are valued on the same multiples as were the Herald and Weekly Times’ assets. "But HWT shares had a lot of control premium in them at the time of the take-over,” Bain’s media analyst said.

Ms James said lEL is the most likely buyer, or a combination of lEI and Bell Group. Mr Plumridge said the S32OM outlay for HSV-7 will have considerable effect on Fairfax’s profits. Of the 1.7 M shares traded on Tuesday broker Potts West Turnbull specialled 10 parcels totalling 1.5 M at $2O a share. Analysts said few conclusions could be drawn from Potts handling the shares, as the broker acts for several of the companies considered to be possible bidders.