PPCS launches takeover bid for remaining Richmond shares

10.30am

PPCS has announced it will launch a takeover bid for the balance of shares it does not already own in meat processor Richmond.

PPCS, which currently owns 63 per cent of Richmond, said in a statement it would offer $3.11 per share, the same price set for a previous bid launched in January last year.

The offer was conditional on PPCS achieving 90 per cent acceptance of the offer.

PPCS gaining a 90 per cent stake in Richmond would spark a compulsory acquisition of the remaining shares.

PPCS chairman Jim Pringle said the $3.11 per share price was attractive and fair value, representing a premium of 16 per cent over the Richmond share price of the past three months.

Richmond shares last traded on Friday at $2.86, having fetched between $2.00 and $3.16 over the past 12 months.

The offer will open on June 28 and is expected to close on July 27.

PPCS and Richmond spent much of last year embroiled in legal battles over the South Island firm's attempts to gain control of the Hawke's Bay-based Richmond.

In the half year ended March, Richmond spent $500,000 on legal fees trying to rebuff PPCS' unwanted advances.

But PPCS chairman Jim Pringle said the relationship was on the mend.

"Much has been resolved in the 12 months since our $3.11 offer closed last year. We want to give those people who chose not to retain their shares, the chance to sell at the same price now," he said.

He said rationalisation in the meat industry was desirable and necessary for the industry's long term sustainability.

"This necessity was partly evidenced by the difficult trading conditions experienced by industry participants in the 2003/2004 peak season, which led to material declines in both revenue and profits for Richmond and others in the six months to 31 March 2004," he said.

Richmond posted a net profit of $433,000 for the half year to March, down from $14.2 million for the same period last year.

Minority Richmond shareholders, the Bell Group, went to the Privy Council to try to force PPCS to launch a full takeover bid at $3.11 per share, but PPCS said the group had breached a condition it had set out for a full takeover bid.

The Bell Group accused PPCS of not honouring an undertaking made during a Court of Appeal hearing over share ownership, to pay all shareholders $3.11 a share.

But PPCS said that by appealing the Court of Appeal decision, which affirmed PPCS's 63 per cent ownership in Richmond, the Bell Group had breached a condition of the deal.

In April, PPCS said it did not believe it was obligated to make a further takeover offer.

If PPCS succeeds in gaining a 100 per cent stake in Richmond it will be the country's largest meat company.

Otago-based PPCS is primarily a lamb producer, while Richmond is mainly a beef producer.

- NZPA