New Zealand co-operative PPCS on Monday made a NZ$39 million take-over offer for full control of Richmond Ltd in a bid to create the nation's largest meat company and complete a near seven year quest for control.
Farmer-owned PPCS is offering NZ$3.11 ($1.96) per share for Richmond, valuing it at NZ$106 million. The offer is 16 percent above the NZ$2.68 price at which the shares last traded on June 11.
PPCS already owns 62.93 percent of the meat processor and exporter after a previous offer, made at the same price, concluded in May 2003. "PPCS believes that this is a very attractive price, and one that provides a very good opportunity for shareholders' to realise their holdings at a price above that recently available through the share market," the South Island-based firm said in a statement.
Brokers said the success of the bid would depend on the attitude of a some key minorities.
"It depends on the opposition. That's the price that they have been taken out at," said Nigel Scott of ABN Amro Craig's.
Richmond's second largest shareholder is British based meat retailer Bernard Matthews Plc, with a 12.57 percent stake. A small group of minority shareholders controlling around 1.5 percent of Richmond, the Bell Group, led a legal fight against PPCS last year.
The take-over, if successful, would create New Zealand's largest meat company in a sector vulnerable to weather, variable livestock numbers, fluctuating exchange rates and long-standing over-capacity in processing facilities.
Meat exports are economically significant for New Zealand, earning around NZ$4.3 billion in the year to April, about 14 percent of the country's agriculturally dependent export trade.
Richmond had revenue of NZ$1.22 billion in the year to September 2003 and a net profit of NZ$12.9 million.
PPCS had revenue of NZ$1.37 billion with an operating surplus of earnings NZ$21.5 million. The two companies combined produce around 37 percent of New Zealand's sheep meat exports, 35 percent of beef exports, and most of the venison.
Both have warned that they expect full year profits in 2004 to fall because of weather related problems and the impact of the high New Zealand dollar. Other large meat processors included the listed AFFCO Holdings and the privately held Alliance.
Richmond has been the subject of a take-over offer and associated legal battles with PPCS since the late 1990s, when PPCS first started to build a stake in its rival.
The legal battle culminated earlier this year when the British-based Privy Council, then New Zealand's highest court, rejected a bid by a group of Richmond shareholders to overturn lower court decisions largely confirming PCP's control.
The two companies are complementary in their operations with Richmond based in the North Island and PPCS in the South Island. In April PPCS raised NZ$75 million through a bond issue, subsequently listed on the NZ Exchange, to fund the take-over of Richmond.
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