PERTH investor Barry Patterson looks set to make a clean and profitable exit from his rescue of office supplies company National 1 after French firm Lyreco announced a 14-cents-per-share takeover bid.
The on-market bid, at a miniscule premium to the previous market price of 13.5 cents per share, values the loss-making Perth company at $33.8 million.
It comes nearly a year after Mr Patterson invested $10 million in National 1 at a price of 10 cents per share.
Since then, National 1 continued to experience operational problems and financial losses, culminating in the resignation of founding managing director Warren Arbuckle in January.
Lyreco, which formed a strategic alliance with National 1 in June last year, is a private French company and one of the biggest office supplies companies in Europe.
It intends to replace National 1’s current directors – chairman Barry Patterson, managing director Dan Fogarty and finance director Mark Manderson – with its own nominees.
It also plans to “pursue efficiencies that may be available to both National 1 and Lyreco as part of a combined group”, according to its bidder’s statement.
Specifically, it plans to use its global purchasing arrangements to improve National 1’s supply contracts and will examine whether a narrower product range would result in cost reductions.
Lyreco chief executive Eric Bigeard told WA Business News that National 1 staff should welcome the acquisition.
“If it succeeds it means that National 1 will be part of a stronger, bigger entity with a specialist focus on this market,” he said.
Mr Bigeard said National 1 was “very heavily in debt” and not profitable.
It recently reported a $13.2 million loss for the six months to December 2003 on revenue of $66.2 million.
“I think there needs to be a solution, whether it comes from Lyreco or someone else,” Mr Bigeard said.
He added that the 14-cents-per-share valuation was based on Lyreco’s assessment of National 1’s operations rather than its recent share price.
“We looked at the company and made our valuation according to the basics of National 1,” Mr Bigeard said.
Managing director Dan Fogarty said National 1 had appointed law firm Clayton Utz to advise on a formal response to the bid.
However, he said the takeover “only brings positive attributes to National 1”.
When asked if the current board encouraged Lyreco to lodge a bid, he said: “We’ve certainly been looking for appropriate options in terms of securing the future of National 1”.
