Take-Over Bids Inflation Symptom

Press, Volume C, Issue 29503, 3 May 1961, Page 14

Take-Over Bids Inflation Symptom

(Mate Zealand Press Association)

AUCKLAND, May 1 The take-over bid was a symptom of tnfiattonary conditions like the present, when the stock market was buoyant with premiums high and yields low, and when inflation was busily altering the money values of real assets said Mr E. H Halstead in an address this evening to the Auckland branch of the Chartered Institute of Secretaries. It was often the shareholder’s answer to inflation, providing a souree of taxfree capital profit and a protection against over-cautious and niggardly direction, he said Providing, as it did, a spur to good management and an adequate regard for the interests of shareholders, the take-over bid was good for capitalism with a wide spread of shareholding, the shareholder had very few rights, except in selling shares, and, ar there was a tendency today for company management and ownership to be aeparated. the interests of shareholders and directors could 1 differ. i However, the take-over 1

threat, or the possibility of s take-over, served to keep directors alert, and. generally, it was a good thing for shareholders, provided the directors knew how to handle the bid when it came. The techniques and methods of take-overs were often open to question, and the conditions of present day economies, particularly in Anglo-Saxon countries, had some artificial features which made take-overs possible when they were not always desirable In a welfare state, where taxation was high and there was a high level of social spending, take-over techniques were well developed, and the reasons for (hem were more acute There was nothing unethical in a take-over bid. Mr Halstead said. It was obvious that overseas firms had got their eyes on New Zealand and were going to get their hands on any New Zealand company which they felt they could integrate into their own organisations. In view of this. New Zealand companies with high reserves end low earning rates would be well advised to get busy and reorganise.