Suitor Undeterred by CalMat Plan to Sell Assets
WELLINGTON, New Zealand--Brierley Investments Ltd., the New Zealand conglomerate pursuing Los Angeles-based CalMat Co. for $980 million, will not be deterred by the cement maker’s restructuring plan, a senior Brierley executive said Monday.
“We are still pursuing the course that we set out on,” Brierley Deputy Chairman Bruce Hancox told Reuters in an interview. Brierley owns 19% of CalMat.
Brierley, led by Sir Ron Brierley, New Zealand’s best-known corporate raider, bid $40 a share last month for CalMat, but the big West Coast company has resisted the overtures. Last week it said it would launch a restructuring program and sell assets, including its cement division and real estate holdings, worth about $800 million.
“Their rejection of our proposal . . . and their subsequent reconstruction plan has not in any way altered our intention,” Hancox said. “We have basically informed them that we are not deterred, we are prepared to proceed, but we feel it is in the interests of all that we have some discussion.”
Brierley’s investment empire, which stretches from New Zealand to Australia, Hong Kong and the United States, is one of New Zealand’s largest, with an estimated 3% of the nation’s population owning stock in the company.
In the United States, the group owns the department store chain Higbee Co. and has smaller stakes in several other companies.
CalMat shares rose $13.50 to $45.375 after the bid was announced.
On Monday, they were at $42.125, down 37.5 cents.
Hancox said Brierley was not considering raising the offer. “The market hasn’t reacted well to the reconstruction plans and there was nothing in there that leads me to believe that we have to address that issue (of the bid price).”
Hancox said Brierley was not overly surprised by the restructuring plan, although he did criticize it.
CalMat has said that the after-tax proceeds of the asset sales would be distributed to shareholders either through a special dividend or a repurchase of shares.
Hancox said capital gains taxes in the United States could cut the returns to shareholders to about 60%.
“You would be silly to sell the ready mix, and you couldn’t sell aggregates without selling ready mix. . . . The only piece you could sell independently in the market was the cement,” Hancox said.
The company also has an asphalt business that is likely to boom, and could compensate for the general weakness in cement prices, analysts have said.
“But you have a very integrated company, and they are really going to start to pull that apart by selling off some end operations,” Hancox said.
