Speculation on CPD as raider’s target

Press, 14 February 1986, Page 10

Speculation on CPD as raider’s target

By

SIMON LOUISSON,

, in

Wellington

The 65 per cent rise in the share price of Cable- Price Downer has brought speculation that the company may be the subject of another corporate raid. A Wellington broker, Jarden and Company, has been an active buyer, but brokers were unable to suggest a corporate buyer. CPD has been widely tipped as a take-over target. Last year, an Auckland broker, Buttle Wilson and Company, stood in the market at 420 c for a mystery bidder, but was beaten off when CPD and Crown Corporation, in a defensive move, established cross-shareholdings of 25 per cent. There has been substantial, but not spectacular, buying in the stock. Some brokers attribute this to institutional investors rather than corporate activity. Mr John Rattray, of O’Connor Grieve and Company, said that CPD and Crown were not really protected from

their cross-holdings, especially if someone wanted to make a “big play” by buying into both companies. A purchase of one company also gives entry into the other and there will be an immediate cash flow if the buyer then sells off one of the crossshareholdings. Crown has been trading weakly at 162 c, with a much reduced profit forecast because of the grim outlook for farming this year.

Mr Denver Olde, of Buttle Wilson, said that the directors of CPD did not

serve their shareholders when they failed to recommend that they accept the Buttle Wilson offer. This had been demonstrated by the fall in price from 420 c at the time of the offer to 256 c earlier this year. He said the fact that both CPD and Crown had permission to lift their holdings in each other to more than 50 per cent had lessened their attraction to investors. One broker said the price rise had been because CPD was cheap on fundamentals and was just catching the market up.