McConnell Dowell bids for Mainzeal

Press, 25 June 1983, Page 21

McConnell Dowell bids for Mainzeal

McConnell Dowell Corporation, Ltd, has given notice of a take-over offer for all of the shares of Mainzeal Corporation, Ltd, to the directors of that company. In making this move, McConnell Dowell has given shareholders an alternative to the proposal presented last week by Noisel Enterprises, Ltd. McConnell Dowell’s proposal involves two alternative offers for both the ordinary and preference shareholders — either cash, or shares in McConnell Dowell together with a cash amount. Both alternatives give a price for Mainzeal shares significantly higher than the Noisel offer, and in cash terms, the total worth of the bid is about $8.5 million. In making this bid McConnell Dowell has given careful consideration to the structure of the various construction companies and groupings within the industry in New Zealand. Mainzeal is an extremely competent, successful organisation, operating particularly in the field of development and design-and-build, and geographically located in the main centres. In this field, the McConnell Dowell group is not represented or active to any degree. Hawkins Developments, Ltd, carries out

some development projects but these have been of a modest nature, and confined to provincial areas. The Mainzeal operations therefore would be an admirable adjunct to the McConnell Dowell group services, and are clearly complimentary rather than competitive with the group’s existing operations. It would be the intention of the group to continue the Mainzeal operation under its existing name with its existing management and staff. McConnell Dowell has been established in Australia for a number of years and is operating a very successful civil engineering activity. It is the directors’ intention to seek growth for the group in Australia across the whole field of construction activity. In this context, Mainzeal, both in New Zealand and through its Australian subsidiary, Triden, could play an active part in this growth. . The McConnell Dowell directors are sure that the two companies’ aims and philosophies are compatible and that added strength will result from an acquisition of Mainzeal — in the case of McConnell Dowell by the addition to the services of the group of a development, design and build arm — in the case of Mainzeal, the availability of added financial strength and resources. The group will be able to offer a wider range of skills and services to prospective clients, both in New Zealand and overseas, particularly in relation to turnkey projects. Undoubted increased benefits will accrue to New Zealand from the expanded operations in Australia as a result of the acquisition of Mainzeal. In offering the share option to both preference and ordinary shareholders, it is believed that the opportunity to acquire shares in McConnell Dowell with its strong share price may be an attraction for Mainzeal shareholders.

Th. cash option is $3.40 for each Mainzeal ordinary share; and $2.10 for each Mainzeal specified preference share. The cash cost to McConnell Dowell if all shareholders accepted this option would be $8,414,430. The share-and-cash option is three McConnell Dowell ordinary shares for each four Mainzeal ordinary shares plus $1.70 cash for each Mainzeal ordinary share; and three McConnell Dowell ordinary shares for each seven Mainzeal specified preference shares, plus $1.15 cash for each Mainzeal specified preference share. Based on a price of 240 c for McConnell shares, this values the Mainzeal shares at 350 c and 218 c. The total cost to McConnell Dowell if all shareholders accepted the share-and-cash option would be the issue of 1,832,411 ordinary shares in McConnell Dowell, and the payment of $4,275,625 in cash. The offer is subject to 90 per cent acceptance of each class of shares but McConnell Dowell have the right to declare the scheme unconditional upon receipt of acceptances of a minimum of 50 per cent of each class. The offer for the preference shares is subject to McConnell Dowell declaring the offer for the ordinary share unconditional, although McConnell Dowell has the right to waive this condition. It is also conditional on the consents under the Commerce Act and the usual provisions as to the continuation of ordinary trading of Mainzeal.