Dated at Wellington this 18th day of August 2006.
The Common Seal of the Takeovers Panel was affixed in the presence of:
David J Quigg,
Statement of reasons
This notice applies to acts or omissions occurring on or after 18 August 2006.
New Zealand Finance Holdings Limited (NZF) holds or controls 74.7% of the shares in Mike Pero Mortgages Limited (Mike Pero). Liberty Financial Limited (Liberty) holds or controls 19.9% of the shares in Mike Pero.
On 26 June 2006, Liberty and NZF entered into a 50/50 joint venture agreement to acquire all the equity securities in Mike Pero through their newly incorporated joint venture company MPMH Limited (MPMH). Liberty and NZF have also entered into a business co-operation agreement in respect of the future business activities of Mike Pero that they will operate as part of their joint venture.
The Takeovers Panel (the Panel) has exempted MPMH, Liberty, and NZF from compliance with rule 35 of the Takeovers Code (the Code).
Rule 35 prevents the offeror, and persons acting jointly or in concert with the offeror, from disposing of any target company securities during the offer period other than to a competing bidder. The exemption granted by the Panel enables Liberty and NZF to accept the offer that is to be made by their joint venture company, and this will enable the offer to meet the Code's minimum acceptance condition. Because of the size of their holdings, MPMH, Liberty, and NZF will become dominant owners under the Code when Liberty and NZF accept the offer by MPMH. They will then be able to compulsorily acquire the outstanding securities in Mike Pero.
In order to ensure that the Code's compulsory acquisition price determination process in rules 56 and 57 works as intended, the Panel has exempted MPMH, Liberty, and NZF from rule 56 to the extent that, for the purposes of determining the consideration payable under compulsory acquisition, the shares held or controlled and the acceptances given by Liberty and NZF for the offer by MPMH would otherwise be included in—
As a result of this exemption, rule 57 of the Code may apply to the compulsory acquisition, depending on the level of acceptances of the takeover offer by the 5.4% minority shareholders in Mike Pero. The Panel considers that it is appropriate and consistent with the objectives of the Code to grant the exemptions from rules 35 and 56 of the Code because—
they facilitate the utilisation of a special purpose company for making the takeover offer and for compulsorily acquiring the outstanding securities, and the use of such companies is accepted market practice; and
they preserve the integrity of the compulsory acquisition price determination process encapsulated in rules 56 and 57 of the Code.