INDEPENDENT Newspapers has been forced to increase its bid for New Zealand newspaper group, Wilson & Horton, to ensure support for the bid from the Wilson & Horton board.
Independent has increased its offer from NZ$ 10.50 to NZ$11 per share, increasing the cash value of the offer from £441 million to £464 million. The independent members of the Wilson & Horton board have now recommended the offer which will cost Independent almost £360 million for the shares that it does not already own.
The Independent offer officially goes live today, when Independent can go into the market and buy shares at NZ$11, and closes on November 8th.
Independent has increased its offer even though an independent report by the banking group, Southpac, had concluded that the original NZ$10.50 offer was fair. It is understood, however, that the independent W&H directors made it clear that, irrespective of Southpac's conclusions, $11 per share was a fairer value for the shares.
Getting the support of the W&H board is seen as crucial if Independent is to reach the 90 per cent acceptance level where it can compulsorily acquire any outstanding shares. The absence of a board recommendation would have made it more difficult to get acceptances for the 40 per cent of W&H shares held by small investors - the so called "mom and pop" shareholders, who would be more likely to be influenced by the board views on the bid.
Sources close to Independent said that the company was confident that it would have got majority control of W&H with its original NZ$10.50 per share offer. The same sources dismissed suggestions from some New Zealand analysts that Independent would be content with a simple majority stake in W&H and added that the intention was always to go for 100 per cent control.
The increase in the cash offer has also meant a change in the number of exchangeable preference shares that makes up the share alternative. Those opting for the share alternative will now receive 1.375 instead of 1.3125 exchangeable shares.
If there is a full take up of the share alternative, then the shares will be converted into Independent shares equivalent to 14 per cent of the enlarged Independent share capital in seven years time.
Independent has said that the W&H acquisition - at the original price - would be marginally earnings enhancing, but has not given any indication of the impact on group earnings of the revised offer.
