PPCS retains dominant role in Richmond

By Libby Middlebrook

The South Island's largest meat processor, PPCS, has maintained its grip on Richmond by forcing changes in the terms of the takeover of Waitotara Meats to work in its favour.

PPCS, which indirectly owns a third of Richmond, the country's largest meat processor, has blocked a vote to increase the board from nine to 11 members.

That means PPCS has held on to its commanding position on the board and can concentrate on buying more shares in Richmond.

PPCS forced Richmond to rethink the terms of the takeover deal with Waitotara Meats, a small Wanganui company with two factories and turnover of $100 million.

The original proposal would have seen PPCS' indirect shareholding diluted from 33.4 per cent to about 25 per cent, but now Richmond has to come up with a new deal, which may include a cash offer.

Last week, Richmond shareholders unanimously approved a takeover of Waitotara, one of New Zealand's smallest meat processors.

Richmond wanted to increase its board to 11 as part of the takeover, which would have put Waitotara chairman Rod Pearce and Richmond shareholder Peter Spencer on the board.

"It was quite clear we weren't going to get the votes," said Richmond chief executive John Loughlin.

PPCS, which wants more control of Richmond, rejected the vote.

The Dunedin-based company makes no secret of its desire to gain a stake in Richmond and has sent letters to shareholders outlining its interest in buying shares.

The processing season in the North Island is about two months longer than in the South Island because of milder weather and stronger grass growth, meaning companies such as Richmond and Affco can export more throughout the year.

PPCS indirectly bought shares in Richmond in February when it acquired 33 per cent of HKM Nominees, a Maori investment company that bought 33.4 per cent of Richmond from the Meat Board in 1997.

PPCS, which has turnover of between $800 million and $900 million, has the option of buying another 34 per cent of HKM Nominees.

HKM, which works in concert with PPCS on Richmond matters, has three seats on the board and would not have received another spot if Richmond's proposal had been approved by 75 per cent of shareholders.

But Mr Loughlin believed the board increase was rejected by shareholders because most thought it would have become too large and inefficient.

"I'm not aware of any hidden agendas," he said.

Richmond's takeover deal - to give Waitotara shareholders one share in the company for every 1.5 Waitotara shares owned, as well as 20c a share as part of Richmond's dividend for the 1998-99 financial year - was scotched.

Industry sources said some Richmond shareholders opposed the deal because it was too costly.

Richmond, which also has turnover of about $900 million, has traditionally been reluctant to work with PPCS. When the Meat Board decided to sell its shareholding, Richmond refused the southerner's offer and sold to HKM instead.

Richmond now has at least 45 per cent of the North Island meat market, with Affco holding up to 40 per cent.