Affco directors split on whether to accept Talleys' offer

Sam Lewis

WELLINGTON - Affco's directors are split on whether to accept Talleys Fisheries 39c per share partial takeover offer despite it being assessed as fair by an independent advisor's report out today.

Deloitte's independent adviser report valued the company as worth between 35c and 45c per share and said the 39c/share offer was in the mid-point of the range and therefore fair.

Affco chairman Sam Lewis, who commissioned the report and planned to reject the offer, said the board had shied away from making a recommendation to shareholders given their split views on whether to accept the offer.

"Each director's perspective on the offer (other than those directors associated with Talleys) has been set out in a letter which accompanies the offer, as each director has a slightly different perspective," Mr Lewis said in a letter to shareholders.

His letter also stated each director's own intentions on whether or not their interests would accept the offer.

Talleys last month announced it was bidding to lift its 40 per cent stake to 50.01 per cent. Its bid was 11 per cent above the then prevailing price.

Mr Lewis said that, as a shareholder with farming interests and family associated with Affco for over 60 years, he did not intend accepting the offer.

Deputy chairman Arthur Young said he would also reject the offer, saying he took "a long-term 'value' perspective'.

"He considers that the ongoing constructive involvement on the part of Talleys coupled with the continuing cornerstone involvement on the part of Toocooya augurs well in the long-term for all Affco shareholders," wrote Mr Lewis.

Independent director Bob Carter and his family trust plan to accept the offer.

"Bob Carter considers that Talleys' involvement with Affco to date has been significantly beneficial for all shareholders, and that their continued participation is desirable," wrote Mr Lewis.

"His view is that individual shareholders should make their own decisions in relation to the offer, based on their knowledge of the industry, information available to them including the Deloitte report, and their own personal circumstances."

Millionaire farmer Chris Spencer, who represents the 23 per cent stake of Toocooya Holdings, had a similar view to Mr Young, said Mr Lewis.

"His shareholding is as a trustee of a family trust which does not intend to accept the offer."

Affco shares last traded at 40c, 1c above the offer price. Talleys director Andrew Talley noted the independent report said if the bid succeeded it would "give clarity of ownership, an issue which has overhung Affco in recent times".

Talleys had through a series of pre-bid agreements and general shareholder acceptances, lifted its stake to 46.47 per cent.

The offer is due to close on April 27.

"The Independent Adviser's Report endorsed not only Talleys own view of value but also that of those other shareholders who committed their holdings to Talleys in the week following the announcement of the offer under pre-bid agreements," Mr Talley said.

He said that while recent stock flows had improved trading in the past six weeks, Affco was still "in challenging times as a result of increased competition and industry overcapacity".

The company issued a profit warning in February and Mr Talley said Deloittes had not acknowledged that in its report.

"On this basis Talleys is of the view that the Deloittes valuation is on the high side.

"Deloittes assessed the chances of an alternative offer as 'very low', noting the significant impediment Talleys existing 40 per cent holding represents and the level of support for the offer that Talleys has through pre-bid agreements in respect of 5.90 per cent of the Affco shares," Mr Talley said.

- NZPA