Richmond shares dip as takeover plans fade

By PHILIPPA STEVENSON and NZPA

Shares in the Richmond meat company fell a further 10c to $2.75 yesterday as the prospect of a successful takeover bid by PPCS faded.

PPCS, a South Island farmer co-operative and Richmond's major shareholder, announced on Monday that it would make a $3.05-a-share bid for shares in the Hawkes Bay company it does not already own.

A High Court judgment requires PPCS to reach a minimum 90 per cent shareholding or lose control of its entire stake.

But Hawkes Bay millionaire Graeme Lowe looks to have stymied the takeover, which is not due to go to shareholders until January 21, after grabbing an 8 per cent share of Richmond's share register in the last month.

Lowe's 3.278 million Richmond shares are effectively 9.96 per cent of the voting capital because PPCS has had to exclude 6.86 million shares from its total stake after the High Court ordered it to forfeit them in November.



Lowe, who has rendering businesses and the country's biggest leather processor, said protecting his supply of byproducts from Richmond was one reason he bought the stake.

He would not say whether he would sell the stake if Lowe Corporation got a supply deal with PPCS.

"We haven't decided where we stand yet. We're just investing money, that's all."

Another key shareholder, Richmond director Rod Pearce, who has 8.67 per cent of the voting shares in Richmond, rejected speculation he had sold some shares to Lowe.

Pearce said he was still weighing up selling and was not prepared to say what he would do until he had had discussions with fellow directors and shareholders.

Other key shareholders include farmer suppliers, who collectively hold about 9.5 per cent of voting shares, and staff, who hold about 6 per cent.

Farmer James Aitken, who led the former Richhold group of shareholders that was set up to block PPCS getting 100 per cent of Richmond in 2000, said the offer was unlikely to succeed. Many shareholders would not want to sell to PPCS.

"I'm not prepared to sell my shares at $3.05 to PPCS," he said.

If the offer came from another company, he might feel more inclined to sell.

"A lot of shareholders feel that way," Aitken said.

He said about 1700 of the 2000-odd shareholders in Richmond were farmer-suppliers and employees.

A letter to shareholders from Richmond yesterday notes that the $3.05-a-share bid is dependent on not more than two of Richmond's existing bankers or financiers requesting or demanding early repayment of their lending facilities or indicating that they will do so.



Richmond told shareholders it had appointed a sub-committee to deal with the takeover offer comprising all directors except Stewart Barnett, "who is conflicted due to his representing PPCS on the Richmond board".

It said the committee's terms of reference were to ensure compliance with the company's obligations under the Takeovers Code.

Shareholders would receive a target company statement, including an independent adviser's report on the merits of the offer, and the directors' recommendations on the offer, which is due to close on February 26.

"Acceptance or rejection of PPCS's offer will rest solely with you the shareholders, which is entirely appropriate and clearly what Justice Young had in mind when he made his interim orders in the shareholding litigation," Richmond said.