Blue Sky supports offer

Blue Sky Meats' board is recommending shareholders accept a takeover offer from NZ Binxi. Photo / bluesky.co.nz

Blue Sky Meats' board is recommending shareholders accept a takeover offer from NZ Binxi (Oamaru) Ltd at $2.20 a share.

Last month, shareholders were told $2.50 a share was the price at which Blue Sky directors would recommend the offer and they were advised to wait for the outcome of negotiations.

Blue Sky Meats chairman Scott O'Donnell. Photo / Duncan Brown

NZ Binxi, which already owned 13.5% of the Southland-based meat processor, later said it would not be upping its $2.20 offer.

In a letter to shareholders, chairman Scott O'Donnell said the board unanimously recommended shareholders accept the offer.

Outlining the reasons, Mr O'Donnell said NZ Binxi's recent public statement meant a price increase was no longer possible under New Zealand takeover law.

The board undertook a process seeking a buyer last year and NZ Binxi's offer was the highest value proposal that resulted from that process.

An independent adviser valued Blue Sky Meats at $1.93-$2.21 a share and the offer was at the top end of that range.

The board considered there was unlikely to be a competing takeover at a higher price. It also considered it unlikely there would be an equivalent ''liquidity event'' - an ability for all shareholders to sell their shares at an acceptable price - in the medium term.

While the board considered there was potential for future value to be created by the implementation of the new strategy, there were risks associated which could adversely affect the realisation of that value.

It was also possible shareholders might need to provide new capital to fund the capital expenditure contemplated by the strategy.

The board had considered alternative transactions that could be pursued with NZ Binxi. However, those opportunities were available only if the offer failed and there was ''no certainty that NZ Binxi would be prepared to engage with us on any of them''.

In addition, none of the alternative transactions would have provided all shareholders the opportunity to sell all of their shares at $2.20 per share.

The offer closes on February 18.