Exchange in merger nod

Press, 9 March 1988, Page 37

Exchange in merger nod

PA Wellington The Stock Exchange yesterday removed the last regulatory obstacle to (the merger between Lion (Corporation and L. D. Nathan and Compapy by granting the proposal a waiver from the terms of the takeover code. The Exchange was concerned about the 920 c being paid in cash to merchant bankers, Fay, Richwhite, by Lion for a 35 per cent holding in L. D. Nathan. Other shareholders have only been offered a scrip swap of one; Lion share for one L. D. Nathan share. Lion Corp last traded at 560 c and L. D. Nathan at 555 c. I “One of the (principal aims of the takeover code was to protect! the interests of the minority shareholders,” said the Stock Exchange’s president, Mr Robert Wilson, in a statement. “In the case of this particular- offer the best expression of those interests would appear to be the level of acceptances by those shareholders remaining after putting aside the holdings of both the Fay, Richwhite and Cooper/Mace interests. “Acceptance ok the offer by more thajn 50% of those remaining; shareholders would be a clear indication of where those shareholders ? believed their interests lay.| “Consequently the condition of granting the waiver is that Lion undertake not to declare the merger offer Unconditional until a clear majority of these remaining minority shareholders haye accepted the offer.” Lion had last (evening provided this undertaking to the Exchange, (Mr Wilson said. Athough the proposal as it stood was clearly in breach of the spirit and intentions of the code, the Exchange had tried to look to the interests of those parties whom the code attempted to protect — the minority! Nathan shareholders. Under the provisions of

the code, Lion could have acquired the Fay, Richwhite holding,, waited 3 months and then made a general offer along the lines proposed without coming [into conflict with the Exchange. Such i a delay in the completion of the merger would result in a delay in achieving the perceived merger ! benefits which would not be in the Interests of the minority Nathan shareholders, Mr Wilson said. The Exchange has decided to give urgent consideration to altering its listing requirements to increase the 3 month threshold to 6 months but this would not apply to the current proposal, he said. The Exchange also expressed concern about other aspects of the takeover code. “The merger proposal highlighted both the absence of any effective takeover law and the inequality which could result from one party acquiring a strategic holding in a listed company without a corresponding obligation to make a general offer for the , remaining shares,” Mr Wilson said. All of the major markets with which New Zealand deals have formal takeover regulations in place which bind all participants, and the merger proposal currently under consideration emphasised the urgent need for similar: law in New Zealand. “Without such law the international appreciation of the New Zealand market would continue to be unfavourable and any harmonisation of trading with the Australian market would be impossible," he said. "It was therefore essential that the Minister of Justice gave the highest priority to reform in this area to enable the New Zealand securities market to recover some of the ground which it had lost in recent months.” Lion meeting, Page 39