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Affco directors get in behind Talley's takeover bid

Tuesday 21st September 2010

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Affco Holding’s independent directors are now endorsing the takeover offer from South Island food producer Talley’s, which declared its proposal unconditional today.  

The meat processing company told shareholders it negotiated a commitment by Talley’s to make the offer unconditional, which would mean all shareholders would be paid within seven days, after Hugh Green Group accepted the Talley’s offer.

Talley’s made the announcement today, saying it had acceptances of almost 85% after the deadline on the offer expired yesterday.

“The current offer provides price certainty within the range that an independent advisor has found to be fair market value in the circumstances which given the high rate of acceptance under the offer suggest a significant deterioration in liquidity in the foreseeable future,” the company said in a statement.

“The independent directors now recommend all shareholders accept the takeover offer.”

Talley’s, whose businesses range from frozen vegetable to seafood and ice cream, already controlled the company, with about 53% of the stock and had agreement to buy the 23.5% held by the Spencer family’s Toocooya Nominees.

The offer price was within the 34 cents to 44.4 cents independent valuation of the company. Talley’s didn’t offer a premium to mop up the remaining shares. Affco traded at the offer price in the days leading up to the offer. The shares peaked at 61 cents in August 2008.

The agreement to buy Toocooya’s stake triggered the full takeover offer. Affco, New Zealand’s fourth-largest meat processor and exporter, was established in 1904 and currently operates nine plants in the North Island and two plants in the South Island.

Shares of Affco were unchanged today at 36 cents. The company owns 35% of Open Country Dairy, an independent dairy processor that buys regulated raw milk from Fonterra, while Talley’s is the third biggest shareholder with about 17%.

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