Brierley’s

"Nothing captured the headlines like the big companies. Brierley’s, Omnicorp, Judge Corp, Equiticorp and Chase were familiar corporate names."

"Unrelated, and many months later, Heatley took a late call at home from brokers Buddle Wilson. It transpired that somehow Brierley’s had learned that Michael Horton was booked on a flight from Auckland to Los Angeles. As soon as the plane had taken off, Brierley’s had launched a raid on Wilson & Horton shares. Horton could mount no defence because he did not even know the raid was happening. The brokers were acting on his behalf but without his knowledge. ‘Suddenly, Wilson & Horton, through Buddle Wilson, think I might be able to stave off Brierley’s,’ Heatley says. ‘Brokers are furiously trying to buy shares and they are calling and suggesting that I become a white knight but I was not interested without an agreement with Michael, which I could not have because he was on a plane.’ It was not the last time that an unfortunate turn of events for Wilson & Horton would become an opportunity for Heatley."

"For Rainbow, the pleasure of sealing the Woolworths Australia deal masked an ominous downside. Brierley’s had gone after the same 20 per cent stake for which Rainbow had successfully bid. Via its Australian investment arm, Industrial Equity Ltd, BIL already owned 20 per cent of Woolworths and was keen to increase its stake in the Australian supermarket chain. So soon after BIL had been forced to pay more for Rothmans than it had expected, Rainbow had again irked its bigger competitor by getting in the way of a deal that Brierley’s thought it should have clinched. Whether or not Heatley and Lane were aware of it at the time, their Woolworths purchase turned Rainbow into a Brierley’s target."

"Matthew had to stand up and tell shareholders that the meeting could not go ahead. The injunction granted to Rainbow had been upheld. ‘I remember Bruce Hancox from Brierley’s coming up to me at the meeting and saying, “Craig, we want this animosity to finish. We want this fight to be over. You’ve won. We want to buy your 18 per cent and all this can go away.” So I said, “Well, there’s a price at which we’d sell.” And of course there was a price at which we would sell because, after all, we’d bought it in order to make money.’ The two companies negotiated, Brierley’s accepted Rainbow’s price and Rainbow came out of the deal with a $22 million profit. It was a lot of money and, equally important, it was a win."

"Heatley, Rainbow and other relative newbies to the investment scene were already seen as upstarts. But they were upstarts who were sometimes nimbler, who sometimes made better decisions and who often offered more money, allowing them to muscle in on territory that had only a short time before belonged exclusively to their established rivals. There was one sure way Brierley’s could prevent this happening again—it could take over Rainbow. And if it moved quickly enough, Brierley’s would also get its hands on the stake in Woolworths that it so keenly wanted. Brierley’s believed that this would also allow it to get around Australia’s takeover laws, which said that, other than an allowed creep of 3 per cent each year, any investor planning to acquire more than 20 per cent of a company had to bid for all of it. Rainbow did not seem to realise the danger it was in. It was also stretched by debt. The month after acquiring Woolworths, Rainbow placed 21 million shares worth $100 million. Heatley was quoted as saying that the placement not only improved Rainbow’s gearing ratios, but ‘it might answer some of our armchair critics’.[3](private://read/01jectdbce729daxqkxt7cbe8r/#mn8) The company had not abandoned plans for listing in Australia, he added."

"⁠But in February 1987, Rainbow and Progressive shocked Brierley’s and the rest of the market by announcing that they were intending to merge. The new company would be called Astral Pacific and it would have $580 million of shareholders’ funds and gross combined assets of $960 million. The purpose of the proposed merger was to consolidate Rainbow’s investment in Progressive and control all its cashflows. For a company like Rainbow that had an increasingly large debt to service but little cash, Progressive’s cashflow was alluring. The new venture would own Rainbow’s 20 per cent stake in Woolworths, so Astral Pacific would predominantly be a food company and would sell its other assets that did not fit. The two companies planned a stock swap to achieve the merger.⁠"

"The defamation action never proceeded. In the end, BIL’s greater strength, size and presence was too much for Rainbow and when the endgame came, it was played out swiftly. BIL’s Bruce Hancox asked Rainbow for a high-level meeting. Hancox came to Heatley’s office. The battle was harming both sides, he said. It was doing no good for Rainbow, for BIL or indeed for New Zealand’s investment scene overall. A week later, Hancox came again and the two companies agreed to a truce. Another week passed and Hancox returned, this time to tell Heatley that Brierley’s had started buying Rainbow shares and was aiming for a bigger stake."

"He was shocked after attending his first Brierley’s board meeting to receive a copy of the minutes on one side of A4 paper saying what time the meeting had been held, the venue, who was present and what time it ended. The minutes said nothing else. Brierley’s, wary about the legal process of document discovery, played its cards close."