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Revised Bid For Taylors Group Within Value Range Assessed By Independent Advisor

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Fuseworks Media
Revised Bid For Taylors Group Within Value Range Assessed By Independent Advisor

The revised bid by Spotless Services (NZ) Ltd for those shares of Taylors Group Ltd which it does not already own, announced on Friday, September 18, 2009 falls within a value range established in an independent adviser's report.

The report, from Grant Samuel & Associates Ltd, is being mailed to Taylors shareholders today, together with the target company statement and a letter from the Committee of Independent Directors of Taylors setting out why they recommend acceptance of the revised bid.

The independent directors commissioned Grant Samuel to advise on the merits of the offer, which they persuaded Spotless to increase from the $2.08 per share envisaged when Spotless announced its intention of making a bid on August 25, 2009, to $2.25 per share, an increase of 17 cents.

Grant Samuel has valued the shares, including any premium for control, at between $2.22 and $2.58 per share.

"Clearly the revised bid of $2.25 is near the bottom of the assessed range," says Mr Trevor Kerr, Chair of the Committee of Independent Directors. "Shareholders should study the Grant Samuel report and the letter from the independent directors, to understand the factors noted in the Grant Samuel report which have influenced the independent directors to recommend acceptance of the offer.

"The report makes it clear that, by virtue of its owning 66.01% of Taylors shares, Spotless effectively controls the company already and there is therefore almost no chance of another party bidding for the shares. It also notes that the offer is 12.5% above the closing price the day before the intention to make an offer was announced, and 31% above the average share price on the preceding 30 trading days, calculated on a volume weighted average share price basis.

"The Grant Samuel report also comments that if the current bid is unsuccessful, the share price could be expected to fall, and that it may be a long time before it reaches the level of the offer again. The report makes it clear that Taylors is a mature company with limited growth potential, which has consistently underperformed the NZX 50 Gross Index. Between 2005 and 2009 revenues grew only 7.3%, with EBIT growing 9.7% over the same period.

"Spotless is adamant that it will not raise its offer again, nor will it proceed with the current offer without the support of the independent directors. Taking those circumstances into account, together with the overall picture set out in the Grant Samuel report, the independent directors both believe the sensible action is for shareholders to accept the offer.

"It is, of course, entirely their decision to make after studying our advice, the Grant Samuel report and the other information and comment provided to them."

Mr Kerr does not hold Taylor shares, but the other member of the Committee of Independent Directors, the Rt Hon Paul East QC, intends to accept the offer for all of his Taylor shares.

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