GPG says Turners/ENZA merger to proceed

By NZPA

Monday 26th August 2002

Pipfruit exporter Enza Ltd and produce wholesaler Turners & Growers Ltd will be merged and listed on the Stock Exchange, investment group Guinness Peat Group (GPG) said today.

Tony Gibbs, chairman of both companies, said shareholder approval for the merger would be sought at Turners' annual meeting on November 8, with a likely listing date set for the first quarter of next year.

"Both boards have accepted in principle the recommendation that the merger proceed, subject to shareholder and regulatory approvals," Mr Gibbs, who is also a New Zealand-based director of GPG, said.

The merger will take place by Turners & Growers acquiring Enza, while current Enza head Michael Dossor will be the chief executive of the merged company.

He will lead a senior management team that includes Don Turner, Jack Sowerby and John Hambling.

GPG, the investment vehicle of corporate raider Sir Ron Brierley, owns 100 percent of Enza and 46 percent of Turners & Growers.

Privately owned Naboa Corp -- Ecuador's biggest banana exporter -- owns 25 percent of Turners & Growers, through New Zealand subsidiary Bartel, while the balance of shares are owned by about 800 grower shareholders.

Mr Gibbs said that grower suppliers of both Enza and Turners & Growers would be offered a preferential entitlement to shares in any capital raising.

Market sources spoken to by the Sunday Star Times also expect the float will seek to raise up to $100 million of new capital from retail and institutional investors.

Lead managers for the float are expected to be JBWere, who are also organising the float of Turners Auctions, which has been spun off from Turners & Growers. The prospectus for that float is expected within 10 days.

GPG and Naboa Corp are not expected to sell down their stakes in the float. However, existing public shareholders in Turners & Growers are likely to mean a "free" float of $150 million.

Mr Gibbs said the merger of the two companies would create a significant global produce marketing business. It is expected to have annual sales of $1.2 billion.

"It will be a big contributor to the national economy and will benefit from synergies in the merger which will add value for shareholders, suppliers and customers," he said.

The synergies are in shipping, transport, container management, overseas importer networks, warehouse facilities, cool stores and shared services like finance and information technology.

Mr Gibbs said GPG intended to remain a significant shareholder in the new company. It is understood work on pricing the issue has yet to be done, but sources expect a newly floated company to have shareholders funds of $300 million-$400 million and to immediately take its place in the NZSE-40 Capital Index.

The new company will be exporting produce from pumpkins to peas. Mr Gibbs said Turners had an extensive onshore network that could supply the offshore Enza network with products other than apples and pears.

The unlisted former family-owned company wholesales and distributes a variety of fruit, vegetables and cut flowers and supplies packaging equipment to the fresh produce industry. From the Enza side of the merger, apples and pears will be a big part of the new company's business.

Last year the government removed Enza's monopoly over the $700 million-a-year apple and pear export industry in a deregulatory move that opened the door for exporters to bypass Enza.

While Enza now faces up to 40 competitors in the export field, it still handles up to 50 percent of the nation's crop. Many orchardists do business with one of the smaller competitors, but still sell the bulk of their crop through Enza, which had the experience and proven track record in respect of security of payments. Part of the challenge for the new company will be to hold the confidence of orchardists, especially in Hawke's Bay, where there is bitterness over the GPG buyout of Enza shareholders.

The possibility of the new company also exporting kiwifruit has been raised. At present the export monopoly is held by Zespri International, the exporting arm of Zespri, the former Kiwifruit Marketing Board. Backers of the new company are suggesting a successful reincarnation of Enza might see it getting into the kiwifruit exporting business.

They see horticulture, like dairying, as something New Zealand does well and for which it has a deserved international reputation. They expect significant interest in any capital raising.

Comments from our readers

No comments yet