11 Sep 2012

Haier may have to go above $1 for FPA

7:14 am on 11 September 2012

Analysts predict that Chinese manufacturer Haier will have to offer more than a $1 per share in order to take over Fisher & Paykel Appliances.

Shares in the whiteware company jumped 22 cents on Monday to 97 cents per share - the highest for 3½ years - after Haier indicated it will make a bid for total control.

Haier approached its three biggest shareholders, Australian investment firm Allan Gray, the Accident Compensation Corporation and AMP Capital over the weekend.

FPA chairman Keith Turner says the fact that Haier sounded out shareholders signals an offer may be imminent.

Haier has indicated it will offer a premium to the share price, but nothing more.

Forsyth Barr equity analyst Andrew Harvey-Green says it will have to offer more than $1 per share it it's serious.

"I guess the best indication we've got at present is where the share price has moved to ... it has traded close to that $1 mark," he said. "They'll probably need to go a little bit further than that to be successful."

Fisher & Paykel Appliances has been hurt by weak demand for whiteware, higher raw material costs and asset writedowns for the past few years.

It's responded by more moving more production to lower-cost countries like Thailand and Mexico, which are also closer to its main markets, while also selling its technology to rivals.

And the tide may be turning, with the whiteware maker saying earnings more than doubled in the first four months' of trading compared with the same period last year.

Mr Harvey-Green says Haier is also likely to be attracted by Fisher & Paykel Appliance's depth of expertise in developing new products.