Richmond offer 22c sweeter

By LIAM DANN

A $7.5 million dividend will sweeten the PPCS bid for full control of listed meat exporter Richmond.

The 22c a share special dividend announced yesterday by the Richmond board will depend on the success of the PPCS offer.

South Island-based PPCS last year gained majority control of its Hawkes Bay rival after a bitter takeover battle dating back to the mid-1990s.

It is now seeking the remaining 37 per cent it does not own.

PPCS has consistently refused to budge on its offer price of $3.11 a share, despite an independent appraisal that valued Richmond shares at between $3.48 and $4.01.

The independent committee of directors said last week that it was in Richmond's best interests for PPCS to go to 100 per cent.

But the committee stopped short of recommending the offer because of the low price.

The success of the bid now lies largely with the second-biggest shareholder, North Meats, which owns 12 per cent of Richmond.

North Meats chairman Norman McRae yesterday acknowledged that the dividend added weight to the offer, but would not say whether his board would sell.

He reserved the right to wait until the offer closing day - July 27 - before announcing a decision.

McRae has already indicated that $3.11 is not likely to be enough.

Last week, he said a special dividend was warranted to recognise Richmond's strong performance this year.

The pre-takeover dividend was well-justified, McRae said.

Two weeks ago, Richmond said it would make a record pre-tax profit of about $39 million - almost $20 million up on last year.

Booming beef exports have driven a turnaround in the company's fortunes over the last six months.

The independent appraisal added a 34c premium because of the extraordinary profit.

PPCS chief operating officer Keith Cooper stressed that the dividend payment was a Richmond decision.

It had not been driven by PPCS, he said.

"It's been made by the board and obviously we have supported the concept."

Despite its majority shareholding, PPCS does not yet have a controlling majority on the Richmond board.

The dividend served two functions, Cooper said.

It recognised Richmond's abnormally good year and it enabled the company to use $5.3 million worth of imputation credits that would be of little value to PPCS as 100 per cent owner.

Paying the dividend made sense regardless of the independent valuation, he said.

"We weren't offering more than $3.11.

"We were always quite adamant about that but the Richmond board, including ourselves, saw an opportunity to recognise those two issues," said Cooper.

PPCS has already said it is comfortable with its position as a majority shareholder.

Following a waiver from the stock exchange, all shareholders on the register as of 5pm today will be eligible for the dividend.

Richmond shares were placed on a trading halt at 10am yesterday pending the announcement.

A 4 1/2-hour delay followed as Richmond sought the NZX waiver.

When trading re-started, the shares jumped 8c to close at $3.20.