Talleys hits wall in Affco takeover

Fishing company Talleys' takeover bid for 50.01 per cent of meat processor Affco appears to have hit a brick wall despite the meat processor having reported a sharply reduced half-year profit.

On April 18, Talleys told the NZX it had acceptances entitling it to just over 47 per cent of Affco.

The next day, Affco reported its net surplus for the half-year to March had slumped 75 per cent to $3.6 million. Talleys' director Andrew Talley said then he believed the figures would encourage Affco shareholders to sell.

However, as of Friday, Talleys had not filed any further substantial shareholder notices to the NZX to say it had won more acceptances for its 39c-a-share bid.

The Securities Markets Act requires Talleys to disclose its holding of Affco stock each time it increases by one percentage point.

Meat industry analyst Allan Barber, a former senior Affco executive, said: "I suspect that [the offer] has hit a bit of a brick wall."

He said 39c a share was not particularly generous and the half-year result appeared not to have been enough to convince more people to sell.

Prior to the half-year results, small shareholders had received mixed signals about the bid.

An independent adviser's report from Deloitte said while 39c was fair, it was below the middle of a 35c to 45c valuation range, which included a premium for control.

Andrew Talley has previously been critical of how high the Deloitte range went. "The top end of that range is over-inflated because it picks the future maintainable earnings at a level we've achieved once in the last seven years," he said this month.

However, Deloitte also noted 23-per-cent, cornerstone stakeholder Toocooya would not sell, saying the offer was not enough.

"Toocooya believes Affco's future earnings and value are potentially significantly higher than an analysis of the company's recent financial results would indicate," Deloitte said.

Also, several Affco directors have said they did not personally intend to accept 39c.