Bell Chief The Likely Buyer In Fai Sell-off
Sydney Morning Herald
Thursday August 6, 1987
Mr Larry Adler's FAI Insurances Ltd has quit its shareholdings in Pioneer Concrete Services Ltd and Ampol Petroleum Ltd at a net profit of $194 million, with Bell Group chief Mr Robert Holmes a Court widely tipped as the buyer of the two parcels.
The idea that Mr Holmes a Court's J.N. Taylor Ltd or an associate picked up the stakes has rekindled takeover speculation for the diversified building products and resource group.
FAI's sale of Pioneer was expected, given the withdrawal in May of its protracted $1 billion takeover offer and subsequent rumours that Mr Adler was seek-ing to offload his shareholdings.
The recent heavy turnover and sharp share price rise also has fuelled takeover speculation, with Pioneer's serving section 261 notices to unmask recent buyers.
It was rumoured that FAI's scrip went to a variety of Australian and UK institutions, but Mr Alder said the shares went to one buyer, whom he declined to name.
Analysts and Pioneer sources named J.N. Taylor Ltd as the buyer. Mr Holmes a Court was unavailable for comment last night and other Bell Group exec-utives declined to talk. However, the buyer will be known within 48 hours following the lodgment of a substantial shareholder notice.
FAI's sale of its 109 million shares (17.7 per cent of expanded capital at an average entry price $2.30 a share) was handled by McIntosh Hamson Hoare Govett Ltd, with 104.5 million sold at $4 (in two parcels) and 4.5 million put through in a separate transaction at between $4 and $4.37.
The 23.66 million Ampol shares (6 per cent, average entry of $3.19) were sold at $3.50 a share, for a gross return of $520 million.
Mr Adler said it would have been "irresponsible not to sell", given FAI's low entry price and Pioneer's current share price.
FAI has kept some Pioneer shares, however, to continue its litigation against directors over the placement of 10 per cent of capital to institutions via Total Holdings (Australia) Ltd just after Mr Adler bid, a move which thwarted the offer and led to numerous extensions.
Mr Adler said Pioneer directors should "not be let off the hook".
Although Pioneer has been successful in removing Mr Adler from its register, its fate still hangs in the balance, with a new major shareholder and the same problem of a very open register.
The asset and cash flow-rich Pioneer, on a prospective 1987-88 price-earnings ratio of about 15 at yesterday's $4.25 close, looks cheap, given its core building products and petroleum refining activities and promising oil (effective 31 per cent of the PNG Iagifu field), uranium and gold exposure through its 28 per cent of Noranda Pacific Ltd.
Assuming Mr Holmes a Court was the buyer, his outlay for 104.5 million Pioneer shares would be $416 million, with a full bid at $4.25 valuing the company at $2.6 billion.
J.N. Taylor would have the potential to raise at least $1 billion for a bid, although the total outlay could be cut by a partial break-up, perhaps with the sale of some building products businesses, with a party like the cashed-up CSR Ltd a possible buyer.
Control of Pioneer also delivers Ampol Petroleum, Ampol Exploration and a major stake in Noranda, which would give Mr Holmes a Court an interest in the major Coronation Hill gold deposit.
© 1987 Sydney Morning Herald
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