Suits 1, singlets 0 as Enza falls to GPG

By Nick Stride

Friday 10th May 2002

"Queen St farmers" have taken effective control of the pipfruit industry.

Guinness Peat Group secured more than 90% of the shares of apple and pear marketer Enza on Tuesday.

The raider and investor will now move to compulsory acquisition of the remaining shares to wrap up its $72 million takeover bid.

The outcome has realised the worst fears of growers who opposed the deregulation of the former statutory producer board.

They wanted the industry to remain in a co-operative model in which only growers were allowed to own shares.

A corporate owner, they argued, would have an incentive to minimise payments to growers for produce to maximise its profits and dividends, reducing them to peasant status.

Enza had revenues of $470 million last year but it has struggled to turn a profit. Its hedging policy cost it more than $130 million when it was caught out by a plunge in the value of the dollar, and some investments, notably the Omniport loading facility, proved ill-judged.

It sold Frucor Beverages, for which Danone last year paid nearly $300 million, for $50 million in 1998.

GPG secured a 19.9% stake in July 2000, paying $1.50 a share. Under Enza's rules at that time that was the maximum stake allowable to one holder.

Corporate financier FR Partners moved in tandem, buying a matching stake. But the two fell out and FRP last year sold its stake to GPG, booking a reported $14 million profit.

GPG has not yet announced its plans for the company and the industry.

Director Tony Gibbs, Enza's chairman and himself a mandarin orchardist, is believed to favour a move toward larger-scale production units.

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