Different prices clutter Richmond advice

By LIAM DANN

Richmond's independent directors say they support a full takeover bid by PPCS in principle.

However, an independent report valuing Richmond shares well above the current offer price has forced the board to stop short of recommending that shareholders sell.

Ferrier Hodgson has valued Richmond shares at between $3.48 and $4.01, higher than the company's peak share price of $3.31.

PPCS - which already holds a 63 per cent stake in Richmond - is offering just $3.11 for the remaining 37 per cent.

PPCS has responded by saying shareholders should judge the offer on its merits - it does not plan to increase or extend it.

"We have said all along that we are comfortable as majority shareholders," said PPCS chief operating officer Keith Cooper.

The company maintained it was a fair offer, he said.

The market price in the days leading up to the offer was $2.68, he said.

But in the past two weeks Richmond shares have spiked as high as $3.31 on the back of strong profit forecasts and good news in the beef sector. They closed yesterday at $3.20.

The statement from Richmond's independent directors basically tells shareholders they will have to make up their own minds.

But it does highlight the Ferrier Hodgson report's inclusion of a premium for 100 per cent control of 54c-$1.07. That is despite PPCS already having majority control.

The report says the underlying value of the shares is $2.60.

As well as a control premium, a further 34c has been added because of Richmond's extraordinary profit result in 2004.

Last week Richmond announced it would make a record pre-tax profit of about $39 million - almost $20 million up on last year.

"We can't understand how you pay a premium when you already have control," Cooper said.

PPCS was going to have a majority on the Richmond board regardless of what happened.

Because the PPCS offer is conditional on at least 90 per cent acceptance, second largest shareholder - North Meats - can make or break the bid with its 12.57 per cent stake.

The numbers

* Richmond share valuations PPCS offer: $3.11 a share

* Market value: $3.20

* Independent report: $3.48-$4.01