Farmer sinks bid for Affco

By PHILIPPA STEVENSON

Affco's biggest shareholder, Peter Spencer, has scuppered fishing company Talleys bid to boost its shareholding in the troubled $1 billion meat company.

Spencer, reputedly New Zealand's biggest private farmer, is understood to have encouraged Talleys' $8 million offer for Hugh Green's 10.5 per cent stake in Affco.

But yesterday, Spencer's failure to put his more than 50 million shares behind a shareholder poll on Talleys' move torpedoed it.

At a special meeting in Auckland attended by about 20 of Affco's thousands of shareholders, the bid was defeated by 56 million votes to 42 million.

Talleys made a conditional offer last month for the shareholding held by Green's companies Green & McCahill and Kilmacrennan Farms.

The Motueka fishing and food company already has a 19.8 per cent stake in Affco and would have lifted it to 30.4 per cent.

Under the Takovers Code, a shareholder wishing to go above a 20 per cent stake in a company must make a pro rata offer to all shareholders for at least 50 per cent unless the transaction is approved at a special meeting.

After the meeting, market analyst Brian Gaynor described the defeat as significant because other companies contemplating the same course would now think twice before attempting it.

There could have been a "landslide" of similar takeover moves if Talleys had been successful, he said.

A report to the Affco board by financial advisers Deloitte Corporate Finance found no ill-effects from the deal on the company, whose independent directors recommended shareholders approve it.

At the meeting, Gaynor asked Affco chairman Sam Lewis whether all the directors, apart from Michael and Andrew Talley and Green's representative Bob Carter, who were ineligible to vote, supported the resolution.

Lewis said they did, but the vote proved otherwise.

Spencer's spokesman and Affco deputy chairman Arthur Young is overseas and could not be contacted for comment.

Neither of the Talleys was at the meeting but afterwards Andrew Talley said the defeat was disappointing. But it would not affect his company's involvement in Affco because its interest remained the same whatever level of shareholding it had.

"It certainly won't affect our relationship with the company or the other shareholders," said Talley.

He did not know why Spencer had not supported the deal "but I intend to find out," he said.

Talleys had been content to stay at 20 per cent and had not looked to increase its holding, but the "opportunity presented itself to increase to 30 per cent", he said.

Talleys would not immediately look to raise its stake "but down the track we'll just have to wait and see".

Green, who also did not attend the meeting, said later that it would be "no problem" to continue as an Affco shareholder.

When the bid for his shares was announced last month, he said his patience with the company (which has not paid a dividend in four years) had been running out and Talleys might be able to straighten it out.

Green said he had worked with Spencer to influence Affco's direction but his company's shareholding lacked weight.

Spencer and Talleys, who would have held 49 per cent of Affco, would "probably be able to do it together", he said.

Yesterday, Green said he had not initiated the share sale and would not now be actively looking to sell.

"We're quite happy sitting there," he said. He had been willing to sell to the Talleys, whose business acumen he admired, but was "happy to stay in with them, too. I still think they are good for it".

He had "no idea in the world" why Spencer had changed his mind and not backed the deal. "It doesn't appear sensible, but never mind. they're his shares [and] he's entitled to do what he wants."

Green said he was not upset because the Affco investment was only a small part of his total assets.

"It could be blessing in disguise,"said. "The company might come round and do very well.

"The company trying to buy my shares must think that as well so I'm in good company."

Lewis said Affco's independent directors had recommended the bid but he was "happy that the shareholders decided otherwise".

He said the board had no contingency plan "because the board did not plan this. This is a deal between two shareholders."

The company's strategy, supported by its four major shareholder representatives, would be unchanged, Lewis said.

"It's business as usual. We're busy at the present time [with] all our plants operating," he said.