MFS takeover bid spurs questions on NZ future
A report in The Dominion says that the future of substantial New Zealand financial businesses controlled by Australian conglomerate MFS appears uncertain after news that the Queensland-based company is considering a takeover offer for much of its operations.
MFS New Zealand chief executive Jason Maywald said yesterday it was “premature to speculate” on any outcomes from the City Pacific proposal to buy all of MFS’ businesses apart from the Stella Tourism Group. “It is business as usual for all of MFS’ New Zealand business interests and we will keep the market informed,” he said.
Michael King, chief executive of MFS in Australia, could not be contacted for comment on what might happen to various guarantees the parent company has provided to its Kiwi offshoot’s finance company if the takeover deal proceeds.
MFS New Zealand, 38.5 per cent controlled by MFS in Australia, has been listed for just over six months. When it was listed, those involved hoped to replicate the enormous growth of the Queensland-based company. It went from start-up in 1999 to being one of Australia’s top 200 stocks.
However, the company’s listing coincided with the unrelated collapse of Bridgecorp and the ensuing crisis in the New Zealand finance company sector. Effects of the global credit crunch have also subsequently come through.
The main asset of MFS New Zealand is MFS Pacific Finance. However, in the first six months of last year the MFS parent bought up several financial advisory businesses here. They included Northplan Financial Services, Swains Investment Services, Colin Strang Financial Planning and Westplan Financial Services.
Collectively the businesses, renamed Vestar, had about $1 billion funds under management.
It was planned for Vestar, valued by MFS at $A73.6 million ($NZ84 million), to be sold to the New Zealand offshoot by December. However, this option was subsequently extended till September this year.
In August the MFS parent committed to support MFS Pacific Finance if that was necessary. It reiterated the commitment just before Christmas.
Under terms of the takeover deal announced yesterday, City Pacific, an Australian financial services group, would issue 225 million new shares to acquire MFS’ financial services business. Earlier, MFS had planned to sell half of its Stella business, which includes various travel operations in New Zealand that were part of the Gullivers Travel Group, taken over in 2006. However, MFS decided in November to keep all of the Stella operations.
MFS New Zealand made an after tax profit of $1.3 million for the six months to September. “Our first half year result is very pleasing and highlights the bright future we see,” Mr Maywald said announcing the result in late November.
The share price was unchanged at $1.20 yesterday.
A Report by The Mole from The Dominion Post
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