Sit tight on PPCS bid says critic

By PHILIPPA STEVENSON and NZPA

An historically influential group of small Richmond shareholders is urging other minor stakeholders to hold out against the PPCS takeover bid.

Hawkes Bay farmer James Aitken led the share-aggregating Richhold group to fend off a previous PPCS move on Richmond.

He said in an open letter to fellow small shareholders yesterday that time was on their side.

Most Richmond directors have recommended the $3.05 a share offer by Dunedin-based PPCS, though Richmond chairman Sam Robinson said he would not accept it.

Independent advisers to Richmond, Ferrier Hodgson, found the PPCS offer to be within its valuation range of $3 to $3.67 a share.

Aitken said a number of events could yet change to small shareholders' advantage.

"All I'm saying to shareholders is don't bolt in and take that offer.

"It is very much at the lowest end of the independent valuation of the company. However, if you accept it, that's it. You've formed a contract with PPCS."

Shareholders could afford to wait to see if a better offer surfaced but would not miss out on the PPCS offer - scheduled to close on February 26 - if an alternative did not appear, Aitken said.

Whether responding to the message or not, there was little action on Richmond shares yesterday. Only one parcel of 360 shares changed hands at $2.86 a share.

Aitken said now was the time for another company, such as Bernard Matthews' North Meats or Graeme Lowe, who recently bought substantial holdings in Richmond, to be galvanised into action.

Another offer would have to beat PPCS' $3.05 bid and shareholders would get cash immediately.

PPCS' offer was conditional, and also subject to a review by the Takeovers Panel on Thursday that could send it "back to square one", Aitken said.

Working together, shareholders could extract maximum value. Richhold had shown that, with Richmond shares fetching about $1.20 before it formed but reaching more than $2 at the time of its demise.

Aitken, who yesterday met two PPCS representatives, said he had yet to be convinced that "being in bed with PPCS is the best thing for me as a farmer".

His doubts hinged on the price PPCS paid for beef and lamb in the South Island, compared with what he earned in the North Island.

Other farmers opposed to PPCS control were spurred by Justice William Young's criticism in the High Court last year of the firm's "gross commercial misconduct".

Aitken said PPCS' previously undisclosed use of Maori investment vehicle HKM Nominees and R.B. Nelson to gain stakes in Richmond had left a sour taste.