Shareholders object to Chows’ offer
The Takeovers Panel is investigating an offer by millionaire property magnates the Chow brothers to buy the remaining shares in their listed company.
Some Chow Group shareholders have objected to Michael and John Chow’s offer of 60 cents per share for the remaining 9.91 per cent of shares in the company, which is owned by hundreds of people.
As a result, the Takeovers Panel is seeking an independent expert to determine if the value of the shares in Chow Group is ‘‘fair and reasonable’’.
An independent report, commissioned by the Chows, showed the company was worth between $9.5 million and $10.7m in June 2018. This meant each share was valued between 58 cents and 65c.
In August 2016, the company’s valuation was sitting at $23.9m. Between June 30, 2016, and July 12, 2016, shares were being sold for upwards of $2.
In May 2018, the brothers became majority shareholders of Chow Group, when they took ownership of 90.09 per cent of the company.
At that time, the Chows, as the ‘‘dominant shareholders’’, said they wanted to exercise their right to buy the rest of the shares in the group.
In a letter, sent to the remaining 723 shareholders on June 7, the Chows stated their intention, and offered 60c per share.
By June 20, the brothers had received objection notices from 1.16 per cent of the remaining shareholders.
In a statement to the NZAX, the brothers said they paid for the remaining 1.6 million shares on Friday.
Once the investigation by the Takeovers Panel was complete, the brothers would then pay the balance to or recover the excess from shareholders, depending on the findings, the brothers said.
The brothers have made an estimated $75m fortune from brothels, hotels and commercial property deals, and manage an 18-strong property portfolio valued at more than $200m.
New Zealand Shareholders Association chairman John Hawkins said the Chow brothers had complied ‘‘completely’’ with the law in regards to the takeover.
‘‘The reality is, the process they’ve followed is the legal process, there is nothing underhand about that.’’
In March 2016, the association warned investors about buying shares in a company with a ‘‘high level of control’’, Hawkins said.
‘‘At that time, there had been a number of related parties – family members – buying into the [Chows’] company, and we said, ‘If you get involved in a company where you have a very large shareholder like this, you need to go into it with your eyes wide open.’
‘‘The performance of the company has been poor, the costs have been high, the profits have been low and that does horrible things to the share price, and people that have invested perhaps didn’t have their eyes as wide open as they should have.’’
Shareholders were objecting because they did not believe the valuation was ‘‘adequate or fair’’, he said.
‘‘Valuation isn’t an exact science, but the company is entitled to rely on the figures it is given. If people want to complain, they have to prove those figures are unfair and unreasonable.’’