Richmond shares test new levels

Friday 8th June 2001

By Chris Hutching

Richmond shares tested new highs at $3.25 yesterday in the bidding war between British meat marketer Bernard Matthews and Dunedin-based PPCS.

The battle for control is taking place against a simultaneous stock procurement war between North and South Island processors, which is pushing lamb prices to nearly $100, about twice last year's prices.

Bernard Matthews via its subsidiary North Meats, and PPCS have declared their intention to seek 60% of Richmond at between $3.10 and $3.65 a share.

The main shareholder group they were wooing yesterday was Active Equities which owns 36% of the shares and is owned by three former Brierley Investments' executives who stand to gain about $25 million at current prices from the shares. They bought them last year from PPCS when it was forced to sell its holding because of the way it was acquired and some analysts have queried whether this was just a temporary arrangement.

In sharp contrast to another debate going on about the pending dairy company merger, Richmond shareholder/suppliers shunned the idea of forming a larger company under PPCS because they said they wanted to ensure they continued to have a choice of processors.

A farmer shareholding group called Richold has 9% and another called Waitotara has 7% of the shares on issue. They considered the cultures of the two companies at odds but mostly they feared stock prices they received would fall under PPCS because of reduced competition and the traditionally lower prices they claimed that PPCS returned to its co-operative members.

Bernard Matthews was offering the chance of a joint marketing operation and PPCS had made similar noises.

But the final determinant was likely to be the price each bidder was prepared to come up with to satisfy Active Equities.

Another factor for PPCS was a Commerce Commission investigation into PPCS's right to buy Richmond shares.

The July 1 introduction of a new Takeovers Code added timeliness to the talks between the shareholding groups. It required suitors to make full bids at over 20%. The main bidders will want to be positioned before July.

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