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Cedenco approves US purchase

By Phil Boeyen, ShareChat Business News Editor

Thursday 15th March 2001

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Food processor Cedenco (NZSE: CED) is supporting a bid by a California-based food business to take a majority stake in the company.

S K Foods plans to take just under a 55% of the company, buying shares currently owned by Brierley Investments (NZSE: BIL) and Mangatu Investments.

The proposal comes after Cedenco last year called for expressions of interest in taking 100% of the company, following an announcement by BIL that it wanted to sell its holding.

Cedenco says it has not received any binding offers for all of the company and the directors believe that the acquisition of a majority shareholding in Cedenco by SK Foods is in the best interests of Cedenco.

"...SK Foods... is one of the largest tomato processors in the USA, has expertise and experience in the food processing industry, is independent, and has similar strategic objectives to Cedenco," the company says in a statement.

"These factors, and removal of uncertainty in Cedenco's share register, will be beneficial to the minority shareholders."

The company says while its New Zealand business continues to perform strongly the Australian market is proving challenging.

"In addition, structural issues relating to the investment in Australia continue to cause concerns about the ability of the business to generate satisfactory returns."

Cedenco is forecasting a profit for the year to the end of September of $6 million, or 25 cents earnings per share after tax.

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