Wrather’s Suspected Suitor Shuns the Spotlight
By all accounts, New Zealand financier Ronald A. Brierley is a man in love with his work.
The 50-year-old bachelor, so the story goes, must be persuaded to take an annual vacation from the rigors of running his multimillion-dollar investment empire by his staff, who buy Brierley a ticket, book the flight and physically place him in his seat. Even then, Brierley packs a suitcase full of annual reports to study in his hotel room.
A Brierley associate puts forth a slightly different version of the tale.
“He does take himself off regularly for holidays,” said Ron Langley, president of U.S. operations for Industrial Equity (Pacific) of Hong Kong, Brierley’s international investment arm. “But he does pack along interesting financial materials.”
Based on recent investments, Brierley must be reading a lot of annual reports of Southern California companies. During the last several months, Industrial Equity (Pacific) Ltd. has bought part of several local companies, including Smith International, Associated Hosts, CalMat and Ameron.
What’s more, IEP is the prime suspect behind a takeover offer for Beverly Hills-based Wrather Corp.
Wrather, owner of the Disneyland Hotel, rejected the offer last week and refused to reveal the identity of the bidder, but IEP is the firm’s largest outside shareholder with a 28% stake.
Langley, in a telephone interview from his La Jolla office, declined to discuss the Wrather situation. Attempts to reach Brierley, who is based in Sydney, Australia, but travels widely tending to his investments, were unsuccessful.
In the United States, where IEP began voraciously buying stakes in companies only recently, Brierley’s name is not as well known as other hunters from Down Under like Rupert Murdoch, Robert Holmes a Court or even “Crocodile” Dundee. That appears to be by design. But at the rate IEP is buying pieces of U.S. companies, Brierley’s low profile won’t last long.
Brierley “doesn’t make that much noise,” said Nestor Hinzack, director of research for the Sydney-based Ord Minnett brokerage, who has closely followed Brierley’s dealings. “He is a very self-effacing, modest individual who is known for living simply and taking some delight in riling the Establishment.”
Brierley’s aggressive investments have been known to terrorize target companies in Australia, New Zealand, the United States and Britain even when the stated intention has been “for investment only.” Yet, Brierley-controlled companies often remain nothing more than the investors they claim to be--particularly in the United States--although they are not above launching hostile takeovers or influencing how a company is run.
Brierley started as a writer of a stock market newsletter and, relying on his own advice during the past 26 years, has built several prosperous investment companies with holdings on four continents.
Judging from investments made by his publicly held companies, Brierley has decidedly eclectic tastes. Industrial Equity in Australia, Brierley Investments in New Zealand and Industrial Equity (Pacific) in Hong Kong, to name the most prominent, have interests in such things as real estate development, oil and gas, retailing, banking, publishing, brewing, car dealerships, hotels, wheelchair manufacturing and a cemetery.
Selective About Targets
“There really is no way to know where they’re going next,” said David Wheeler, an analyst with A. C. Goode, a brokerage in Melbourne. “They don’t target sectors. . . . They invest each situation on its merits.”
The common theme is assets that have been undervalued by the stock market, Langley said.
“It’s always value,” he said. “We analyze the companies very throughly to analyze what the company is really worth.”
The level of participation of Brierley companies in their investments varies from none to an active discussion of management practices. In New Zealand, Australia and Britain, Brierley has waged several hostile takeover battles, partly because of a more resistant attitude by management there.
“We’ll try to encourage or to assist or finance a revitalization of the company,” Langley said. “It’s always our objective to be a constructive shareholder.”
“What counts in all of these situations, at the end of the day if the company does well, then we do well,” he said.
Brierley and his companies, once considered mavericks in New Zealand and Australia, are launching fewer hostile takeovers these days, Hinzack said. Instead, they are extremely patient, usually going for the long haul rather than the short-term gain.
“I guess (Brierley) is an old-style sort of share raider who is no longer an asset stripper,” the analyst said. “It’s not a sort of move in, make a noise and move out process.”
Said Wheeler: “He has proved beyond doubt that he can take a company and turn it around, or he can take a business that’s running well and make it run better.” Existing management often remains after Brierley buys into a company partly because Brierley’s three main companies, with fewer than 90 employees, purposely don’t maintain the staff to ship off to subsidiaries.
Brierley’s investment style has been extremely successful for shareholders, analysts said. Until 1970, his New Zealand company was kept off that country’s stock exchange by a worried establishment, but now Brierley Investments is the nation’s largest company when measured by market capitalization.
“He’s a national hero in New Zealand because so many people have made so much money from him,” Wheeler said. “This guy has gone out from New Zealand and taken on the world.”
Wheeler said Brierley is now spending half his time on his international investments, which began in the early 1980s.
Wary of Presence
In the roiling U.S. stock market, where a large investment can be the prelude to a hostile takeover, the amassing of stock by an obscure Hong Kong company backed by a little-known investor from New Zealand is not always welcome.
At Smith International, for example, the appearance of IEP last November caused some apprehension at the ailing oil services company’s Newport Beach headquarters. After all, Smith executives had never heard of IEP or Brierley, and they “flatly refused” to give IEP two seats on the board when it reached the 15% mark in February, Langley said at the time.
Two months later, an IEP representative was elected to Smith’s board and the disagreement was attributed by Smith to a “misunderstanding” in communications.
Since then, the relationship has been “very, very good,” said Loren Carroll, Smith’s chief financial officer. “I think they’ve been a good addition to our board.”
At Central Pacific Corp. bank holding company, of which IEP owns nearly 25%, “our experience has all been excellent,” Chairman Rayburn S. Dezember said.
IEP began investing in the Bakersfield parent of the 26-branch American National Bank in 1984, when problems with agricultural loans caused earnings to dip, Dezember said. IEP executives, who do not sit on the board, offered advice and assistance and earnings have since improved.
“I would say they are interested investors--they’re not passive at all. They try to help you,” he said. “We need that kind of input.”
Even IEP’s adversaries in what appears to be the one hostile takeover it has attempted--and lost--in the United States, speak well of the investors.
Respect for Adversary
“They came at us pretty hard,” said David V. John, president of Consolidated Capital Income Trust, an Emeryville, Calif., real estate investment trust that survived a move earlier this year by IEP to gain control and oust the board.
“We think a lot of the things they said were unfair and untrue, but we think the things that were said were in the spirit of business and weren’t personal,” John said. “I wish they hadn’t done it--don’t get me wrong--but they behaved professionally.”
During the course of that battle, a Consolidated Capital spokesman noted, one seasoned takeover lawyer observed that “dealing with the Brierley people was like dealing with an American takeover artist 10 years ago. . . . They have that same sort of aggressive, hungry, straightforward approach to everything.”
INDUSTRIAL EQUITY (PACIFIC) AT A GLANCE The Hong Kong-based international investment arm of New Zealand investor Ronald A. Brierley’s companies, Industrial Equity Ltd. of Australia and Brierley Investments Ltd. of New Zealand. Industrial Equity (Pacific) has U.S. holdings in a broad range of companies with an estimated market value of $500 million. IEP’s holdings in the United Kingdom have an estimated market value of $970 million.
REVENUE (millions U.S. dollars) 6 mos Dec. 31 . . . not available Year ended June 30 1986 . . . $410.9 1985 . . . . 113.4 NET INCOME (millions U.S. dollars) 6 mos Dec. 31 . . . $18.4 Year ended June 30 1986 . . . 20.8 1985 . . . . 6.1 Assets (6/30/86) . . . $691.6 million Shares outstanding (1987). . . 312.59 million Listed on the Hong Kong, Australian and New Zealand stock exchanges
