By NZPA
|
Tuesday 7th January 2003 |
Text too small? |
The aggressive South Island meat processor said the High Court required PPCS to have its takeover offer to Richmond shareholders under way by January 24.
To meet that deadline, PPCS needed to serve formal notice to Richmond today and mail the takeover offer to Richmond shareholders so that it was received by January 24.
The takeover bid is part of a two-pronged attack by PPCS on its Hawke's Bay rival.
The second part is the lodging of an appeal against the High Court decision in November, in which PPCS was found to have violated securities law in two share transactions. The court ordered PPCS to forfeit 6.7 million Richmond shares and that it lose voting rights on the balance.
That was aimed at making PPCS either make a takeover bid or sell out of Richmond.
After the forfeiture of 6.7 million shares, Richmond has 34.117 million shares on issue.
To succeed in gaining 90 percent of Richmond's shares and moving to compulsory acquisition, PPCS will have to win over several small farmer shareholders who had formerly clubbed together in the Richhold group to fight PPCS's involvement in Richmond but now hold their shares individually. They hold about 9 percent of Richmond.
Richmond chairman Sam Robinson said he could not comment on the offer price.
The directors would make a recommendation once an independent appraisal was completed on the merits of the offer, he said.
Although PPCS is offering Richmond shareholders $3.05 a share, it will be paying Hawke's Bay Meats, 49 percent owned by PPCS and 51 percent by Active Equities, $3.50 a share for its Richmond shares.
The purchase of the Hawke's Bay Meat stake will take PPCS' stake to 52.5 percent.
PPCS chairman Jim Pringle defended the higher price tonight, saying that PPCS was paying that price in accordance with an agreement it made 18 months ago.
Since then "the meat industry has gone through a difficult period which is reflected in the performance and value of all meat processing companies that are operating in the listed sector", Mr Pringle said.
The $3.05 price represented a 73 percent premium to Richmond's weighted average share price of $1.76 over the three months to November 20, 2002, before the High Court judgment on November 22.
It also represented a 35 percent premium over the weighted average share price of $2.30 during the three months to December 20.
The offer took into account the valuation impact of the forfeiture order issued against PPCS in the High Court in November.
Mr Pringle said the High Court decision gave PPCS three options: a takeover bid that had to reach 90 percent acceptance; appeal against the decision; or do nothing and forfeit shares and lose voting rights.
A senior executive with the Takeovers Panel, Kerry Morrell, said the panel would investigate the offer as it routinely did but it appeared that PPCS may be allowed to make a differentiated offer under transitional provisions introduced when the code came into force in July 2001.
"We would review these things in the normal course of business and I guess that is one thing we would look at," he told NZPA.
There are transitional provisions within the Takeovers Act which apply to contractual rights established before June 30,2001.
"That appears to be what the (substantial security holder) notice implies," Mr Morrell said.
The panel would expect to have investigated the issue before the 14 day pause period allowed before PPCS can formally present its offer.
PPCS chief operating officer Keith Cooper said the market appeared to have already factored in the share forfeiture and the offer was "taking into account all scenarios".
He said Active Equities was receiving more per share because the transaction was entered into 18 months ago when the industry outlook was more positive.
"We have put aside other value and come up with a value which we believe is fair and a good price to minority shareholders," he said.
He said putting the two companies together would allow economies of scale and counter the move for buying groups to coalesce.
"It's about forming a selling entity that can deliver against bigger buying groups," he told National Radio.
There would be some rationalisation of staff in areas such as head office and research and development, he said.
No comments yet
