Cedenco buyer eyes expansion

Friday 11th May 2001

By Nick Stride

Californian food processor SK Foods plans to use Cedenco as an expansion vehicle as it eyes markets in New Zealand and Australia.

SK Foods chairman Scott Salyer, in the country this week to sign off the purchase of 54.8% of Cedenco, confirmed SK Foods was looking for potential acquisitions in Australia, where Cedenco has its tomato growing and processing operation.

Leaving Cedenco as a listed company with minority shareholders gives SK Foods the option of raising capital locally for expansion.

Mr Salyer wouldn't confirm that was the reason SK Foods didn't make an across-the-board offer to shareholders. Due diligence had shown "the majority" of shareholders didn't want to sell, he said, "although obviously everyone's a seller at the right price."

He did say SK Foods was reviewing Cedenco's capital structure and needs.

"The strategy's unwinding over the next few months."

SK Foods, like Cedenco, has no consumer brands of its own but packages its produce for major branded food companies. It has had a relationship with Cedenco since 1993.

Mr Salyer said Cedenco would benefit from SK Food's market-leading food-processing technology. SK Foods also had customers not aligned with Cedenco who were "anxious to increase their business."

Cedenco chairman Basil Logan said the directors would have preferred an across-the-board offer as that would have given all shareholders a choice.

But they were more comfortable with SK Foods, which could contribute synergies to Cedenco's operations, than with last year's interest from Golden Circle.

"The risk was that someone would use the company just as a cost centre."

Brierley Investments said it made a $3.9 million profit on the sale of its 48.5% stake to SK Foods. The other seller was Maori investment company Mangatu Investments.

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