Chase seeks 20% of FTC

Press, 11 February 1986, Page 26

Chase seeks 20% of FTC

Chase Corporation, Ltd, bought about 4.6 per cent of Farmers’ Trading Company, Ltd, shares on-mar-ket yesterday. A bid for 20 per cent of the capital of FTC was launched by Chase before the morning call opened on the New Zealand Stock Exchange yesterday, the corporation offering 175 c for each FTC ordinary share and 500 c for each preference share. Mr Richard Adams, the corporation’s investment division executive, said Chase's broker, Hendry, Hay, Smythe and Horton, of Auckland, reported that it had acceptances for 4.6 per cent of FTC’s shares at the close of trading, but he expected this total to rise to 5 per cent overnight.

FTC’s directors met to consider the partial bid by Chase, but the company’s general manager, . Mr Peter Healey, said a statement was not expected until today. However, late last night the directors of FTC sprang the surprise announcement that they would place 12.5 M shares, or almost 10 per cent of the issued capital of the company with the AMP Society, as part of a 50-50 joint venture which would see the setting up of a new financial intermediary to be called Farmers AMP Credit Corporation. The issue price is 141 c a share, worth a total $17,625,000. The price was the market-weighted sale price of Farmers Trading shares ,over the three months to January 31. The placement will lift AMP’s holding in FTC to almost 20 per cent. The Chase bid, worth SSOM based on the original offer, without taking into account an attached escalation clause if the bid price should be raised, attracted sales on the Stock Exchange of 1,407, 934 ordinary FTC shares at the offer price of 175 c, although the issue closed at 177 c for a 37c gain on the day. Mr Adams said Chase attached the escalation clause

to its offer partly as a defence against a “spoiler” beating the bid prices, and also as a comfort to people who might be undecided about selling in case a better foffer was made.

Chase already held about 2 per cent of FTC’s capital. The corporation had decided that it wanted to diversify from its property-de-velopment activities, he said. In a statement, Chase’s managing director, Mr Peter Francis, said the diversification strategy called for a substantial portion of Chase’s profits to come from investments not directly linked to property development. “Farmers’ is a well-estab-lished retailer with a consist-

ent quality of sales and earnings.” Mr Healey said trading was quite buoyant for FTC at the moment and all divisions seem to be running extremely well. December had been an extremely good month for sales, and this had continued in January and into February, so the results for the second half to March 31 were looking healthy. FTC reported an increased net profit of $10,008,000 in the six months to September 31, up 5.9 per cent in its previous corresponding period, the first time it has exceeded SIOM during the first half of its financial year. Sales were ahead 7.9 per cent to $209.4M.