Managing Director of Donaghys, Ross Callon, today indicated the joint venture management buy out would raise the bid
price to $1.50 cents a share. The original joint venture offer was $1.42 cents per share and shareholders retained the
right to receive the final dividend of 3 cents per share.
This bid now has the support of Donaghys independent directors who are recommending that shareholders accept the offer.
The independent directors have also indicated that they intend to accept the offer for their own shares.
Last month, Mr Callon formed a joint venture with AMP Asset Management to bid for the shares of the listed
manufacturing, marketing and distribution company.
"Following the receipt of the independent appraisal report prepared by Grant Samuel & Associates and the revocation of the final dividend by independent directors, Balclutha has increased the offer price
to $1.50 for each Donaghys' share," Mr Callon said.
"The report stated that the fair value range for Donaghys shares is $1.27 to $1.66, so our new offer of $1.50 falls
above the mid point of that range. We believe this provides an excellent exit price for Donaghys shareholders."
"Donaghys market capitalisation has become too small to attract the support and stability of institutional
shareholders. This follows on from recent shareholder distributions which have a current market value of approximately
$72 million or $2.40 per share."
The market views the main sectors that Donaghys operate in as highly competitive and volatile.
"We believe that having stable and committed ownership as a result of the management buy out will benefit the company
as well as staff, customers and suppliers", Mr Callon said.
The increased bid represents a premium of 33% above the weighted average share price for the last 12 months.
A notice was lodged with the New Zealand Stock Exchange today, and the offer will now be mailed to all of the company's
4400 shareholders.