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Bounty Fresh launches Tegel takeover with minimum target already achieved

Tuesday 29th May 2018

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Philippines-based poultry group Bounty Fresh Foods has sent the offer document for its $437.8 million takeover bid for NZX-listed Tegel Group to all shareholders and said the minimum acceptance condition will be satisfied. 

The $1.23 per share offer opened today and will close Aug. 25, the document shows. Tegal shares gained 4.5 percent to $1.17, having fallen 4.3 percent so far this year.

The offer is conditional - among other things - on Bounty holding more than 50 percent of Tegel's voting rights, any consents required by the Overseas Investment Act and on no events - such as an outbreak of avian influenza virus - that could have a material adverse effect. Tegel must also meet certain earnings thresholds. 

Bounty announced the offer in late April and already has Tegel's cornerstone shareholder Affinity Equity Partners on board, signing a lock-up agreement with the holding company Claris Investments for a 45 percent stake. According to Bounty Fresh, Claris Investments has "irrevocably agreed" to accept the offer. Given that Bounty Fresh already holds or controls 13.49 percent of the voting rights in Tegel "the minimum acceptance conditions set out in the offer will be satisfied," it said. 

While it is seeking 100 percent it said it would welcome any Tegel shareholder that wishes to remain invested alongside Bounty Fresh in Tegel's future. 

According to Tegel, "while the sub-committee of the board is considering Tegel’s position in relation to the takeover notice, it does not consider it appropriate to comment on the merits of the proposed offer." It continues to advise shareholders to take professional advice before acting with respect to their Tegel shares.

Tegel said the target company statement is expected to be sent to all shareholders on June 11 and will provide information on the merits of the offer, including KordaMentha's independent advisor report.

The NZX-listed poultry company will bring forward its 2018 financial statement to coincide with the release of the target statement.

In March Tegel said full-year profit may drop by as much as a fifth because of slower progress in Australia and one-time costs ranging from compliance rule changes to restructuring and disruptions to its New Plymouth processing plant.

Underlying earnings before interest, tax, depreciation and amortisation, excluding one-time costs, is expected to be in a range of $70 million to $72 million in the 2018 financial year from $72 million in 2017. Net profit would be in a range of $25 million to $27 million, down from $31.7 million last year.

One of the takeover's conditions is that Tegel cannot issue any guidance or warning that the ebitda or net profit will be more than 10 percent lower than its guidance.


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