P. & O. AND N.Z. S.S. COMPANIES

Dominion, Volume 10, Issue 3020, 6 March 1917, Page 8

P. & O. AND N.Z. S.S. COMPANIES

IMPORTANT AMALGAMATION

DETAILS GF THE TRANSACTION

In reviewing tho work of the year at tho nnniial meeting of tiio Peninsular and Oriental Stoam Navigation Company, hold in London in December, the chairman (tho Bight Trlon. Lord Inclicapo) said: "On September 8 last tho shareholders of tho P. and 0. Company, at an extraordinary goneral meeting, entered into a. very imixirtant transaction. They decided to purchase tlio ordinary shares of tho New Zealand Shipping Company and to pay for them, by the issue of about P. aiid 0. deferred stock, thereby increasing tho deferred stock to £2,704,853. Tlio transaction, which after full consideration was recommended to tlio shareholders by tho board and was adopted unanimously, has been completed. Out of 90,672 ordinary shares in tho New Zealand Shipping Company, the P. and 0. are now the proprietors of 90,585! shares, only 90 being held by other.?, and the P. and 0. Company has, therefore, complete control of the New Zealand Shipping Company, which owns tlio Federal Line. Tho bargain, as I explained at tho extraordinary general meeting, was. a favourable one for the New Zealand shareholders, because, though we got tho New Zealand shares at par and gave P. and 0. deferred stocK in exehango at par for equivalent amount of New Zealand shares, tho P. and 0. stock is worth in tho market fully three times the nominal amount. In accepting P. and 0. deferred stock at par in exchange for New Zealand shares at par, the New Zealand shareholders displayed considerable confidence in the IJ.1 J . and 0. Company, and 1 hopo that they will find that this has not been misplaced. (Hear, Hear.). At the same timo, knowing, as the board does, the intrinsic value of tho New Zealand shares, taking into account the value of their ships on a conservative depreciated prewar basis, and their liquid assets in the shape of oasli, Treasury bills, and consideration tho company's goodwill, its organisation, and the earning capacity of its ships, tho transaction is not, I believo, an unfavourable one for tho P. and 0. shareholders. A bargain or this description, i/hero the parties are to continue to bo • associated, oan only bo regarded as satisfactory provided it is fair to both sides, in our opinion that is the case here.

<: 'For better or for worse,' as tho parsons say, the late Now Zealand shareholders are now one with the previous holders of P, and 0. deferred stock in tho combined undertakings of tho P. and 0., British-India, and New Zealand Companies, and I. hopo tho arrangement will prove satisfactory, not only to the late shareholders in the New Zealand Company, many of whom 1 am ylad to sso hore to-day, but also to those who held P. and 0. stock 'before the operation was carried through. "The Now Zealand and Fuderal Companies' fleets comprise tweuty-eoven steamers, all up to data and Good poor man's ships, with a gross tounage of 225,037 tons, in commission, and there are several vessels under construction.

"Tho purchase of the Now Zeslaad Company is a continuation of t)io policy embarked upon a few years ago, whon the P. and 0. Company purchased tho Blue Anchor Line running .to Australia, which is now a branch of tho P. and 0. service. Wβ havo no need to bo dissatisfied with tho results of that operation. "Wo shall, in our amalgamation with tho New Zealand Company, havo tho advantage of rotaining tho experience of tho present administration, nnd it is satisfactory to laiow that tho sharoholdors iu tho New Zealand Company who are resident in Now Zealand have unanimously agreed to tho amalgamation, and havo taken P. and O. stock in -Exchange for tho Now Zealand •shares. The local hoard in New Zealand, will bo continued, and wo shall, I hopo, have tho benefit of their services and influence as before.

"I am glad to think that through tho New Zealand Company wo have a peaceful entry not only- into tho Now Zealand trade with this country, but also into the trade between America and Australasia, and between this country and Australasia by way of tho Panama Canal. Tho amalgamation of tho P. and 0. and British-India, Companies with tho New Zealand Companyought to bring with it certain conveniences in tho way of interchange of ships and passengers, and also economies. .The joint fleets of tho P. and 0., Britisli-lndia, and New Zealand Companies, including vessels -under construction, amount to 23fi steamers and 57 tugs, with u gross tonnage of 1,510,923 tons.

"Tim P. nnd O. capital, including debeiituro stockj preferred and doferrcd stock, now amounts to about £7,50ir.000 —a very considerable sum. Wo looked very closely into out' financial position, apart ifrom ways ond meiuis, which are an everyday problem, wheit considering the purchase of the New Zealand Company. Tho Tesult of our investigations wus quito reassuring. It is the. outcome of the prudent policy ivbiuli has characterised the administration of tho companies for many years, and it justified us in concluding that, como what may, with careful managolent tho P. and 0. Company with its enlarged basis and its extended sphere ought to ho capaJblo of holding its own. In tho future it is possible, that tho shareholders may nave to face a reduced return on their deferjicd stock, but if things go moderately well when wo get back to normal conditions, 1 hopo that may not be tho case,"