PPCS hardens stance, hints at stronger action

By Chris Hutching

Friday 9th July 2004

PPCS has hardened its stance over its $3.11 a share takeover offer for the outstanding 37% of shares in listed Richmond it is seeking.

An independent appraisal report by Ferrier Hodgson attributing a fair value for Richmond shares of $3.48-4.01 cut no ice with PPCS chief operating officer Keith Cooper and the PPCS board, which is sticking to its $3.11 offer (PPCS already has 63% of the Richmond shares).

The Richmond independent directors are supporting the takeover in principle without specific recommendations on price and they note their view of the underlying value of the shares is about $2.60. They say Ferrier Hodgson based its assumptions on the 2004 "extraordinary" profit report when market conditions suggest a lack of real growth in Richmond's operations and profits due to industry competition.

Meanwhile, the underlying message from PPCS is that it is making the full takeover offer to fulfil obligations it made to the High Court last year as part of the six-year litigation with disgruntled minority Richmond shareholders. The full takeover is understood to be the last matter that minority Richmond shareholders could possibly enforce against PPCS. According to reliable sources, the PPCS directors and senior staff were annoyed by the recent bullish 2004 profit forecast from Richmond senior executives made soon after the PPCS $3.11 offer was announced.

Cooper said PPCS had so far chosen not to be "over-zealous" but he noted the recent "movements" after the Tenon and Wrightson partial takeovers.

There are about 40 Richmond staff in Hamilton whose jobs may be at risk if PPCS decides to restructure the administration and the board of directors may be changed.

"We've gone through all the statutory processes. We've worked with the Richmond people, we've made an offer to clean the slate and allow those who don't want to be shareholders to exit. But we will be exercising our majority position. Those people who control the 37% balance all bought their shares last year, for whatever purpose, and they can now exit if they want to."

The upward revaluation heartened the minority Richmond shareholders led by Hawke's Bay lawyer Robin Bell. They have been holding on to their shares in the hope they can extract as high a price as possible in the culmination of the bitter takeover war. The largest independent shareholder is North Meats with 10%.

The control PPCS already enjoys allows it to consolidate the Richmond accounts and marks the formation of the country's biggest meat company nearly twice as big as its nearest rival.

Meanwhile, experienced businessmen Ian Farrant and Richard Somerville have been appointed as PPCS independent directors.

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