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NZX-listed takeover activity hits decade-high in 2017

NZX-listed takeover activity hits decade-high in 2017, set to persist this year: Bell Gully

By Paul McBeth

March 13 (BusinessDesk) - The New Zealand stock market marked eight formal takeovers last year in its busiest year for a decade, and law firm Bell Gully expects that activity will persist in 2018.

Of the eight takeovers mounted, only three were successful, and one is still to be decided. That low success rate was due in part to two of the offers shaking out rival offers, something New Zealand's stock market doesn't typically see, the law firm said in a takeovers report.

Just 5 percent of takeovers on NZX are typically contested and the outcomes of last year's rival bids could spur greater competition in the future, the report said.

Bell Gully's report said takeover activity on the local market increased for the fourth year and was the busiest it's been for a decade with about twice the average annual rate since the Takeovers Code came into effect in 2011.

Partner James Cooney said the conditions for mergers and acquisitions are "still strong" and that should spur greater interest from buyers.

"There are a number of buyers in strong positions out there and may suggest we might see a continuation of contested offers," Cooney told BusinessDesk. "We would expect to see reasonably solid levels of takeover activity."

The Bell Gully report echoes rival Chapman Tripp's M&A insights paper, which showed the number of local transactions climbed 31 percent to 127 deals last year while noting the value of those deals more than halved to $3.5 billion on the lack of major transactions.

Takeovers launched and completed last year were Spark New Zealand's hostile offer for TeamTalk, competing bids for Tower by Fairfax Financial and Vero Insurance, rival partial offers for New Zealand Oil & Gas by OG Oil & Gas and Zeta Energy, WSP's offer for Open International Consultants, and Yang Kee Logistics' bid for Fliway Group.

The final takeover offer from 2017 will be decided tomorrow at a special meeting of Trilogy International shareholders, who have been offered $2.90 a share by China's Citic Capital Partners. The offer was a 28 percent premium to the trading price before the announcement and is being run via a scheme of arrangement, which requires 75 percent approval and at least half the voting rights to be cast.

Four of last year's eight takeover offers were run as schemes of arrangement, similar to Australia's 2017 rate.

Cooney said the structure of takeover offers is "very factor specific" and he wouldn't make a standard recommendation.


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