By Chris Hutching
Friday 30th May 2003
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This week the Takeovers Panel was considering whether the minority shareholders have been colluding to spoil the PPCS takeover offer by building up a stake of more than 20% the threshold that triggers a formal takeover offer to all shareholders.
It is unclear who brought the matter to the attention of the Takeovers Panel, although parties associated with PPCS are the likely complainants.
One of the most recent takeover issues settled by the Takeovers Code was the Designer Textiles case (details available on the panel's website). The Takeovers Panel found that several small shareholders had colluded to build their combined stake in Designer Textiles to more than the 20% threshold and ordered that some of the shares be sold.
The panel sought submissions on Monday from all parties about whether the same thing has occurred in the Richmond situation. The panel's decision should be known before a Court of Appeal hearing at the end of July that will decide the outcome of the takeover battle. The PPCS takeover offer expired last Friday with Richmond's share price rising to $3.17, reflecting a last ditch effort by spoilers trying to derail the $3.11 offer.
PPCS and Richmond parties have agreed that the outcome of the takeover battle should now be decided in the Court of Appeal. PPCS will try to overturn earlier High Court orders that if it failed to obtain 90% of Richmond shares (as it has) it would forfeit 17% of the shares it owns and lose voting rights on another 43%.
The takeover battle has overshadowed the appointment of new chief executive Richard Carver, an executive of Carter Holt Harvey subsidiary Ecopine, who takes over on July 1.
PPCS is also concerned about what it views as the partisan nature of media reporting of the takeover and today was due to host several journalists at its Dunedin meat works to show them its modern manufacturing processes.
The minority Richmond shareholders are apparently driven by a parochial fear of losing control to the PPCS southerners, according to an analyst who said the opposition had become "irrational."
Either way, the scrap continues to affect Richmond's performance as evidenced in its recent half-year profit announcement, albeit a significant turnaround from earlier losses.
Richmond announced three weeks ago that it had made an after-tax profit of $14.2 million (pretax $21.2 million). It then stated that Richmond had "made no change to the forecast full year $22 million pretax profit ... Chairman Sam Robinson said without question these results vindicated Richmond's investments in the upgrading of value-added facilities, staff training, the strong focus on cost control, and the elimination of many of the negatives of last year." An interpretation of the statement would conclude that it appears to be saying the full-year result after tax is likely to be about the same level as the half-year after tax result unless there is a significant change in tax treatment between the two periods.
While Richmond and PPCS continue to slug it out and weaken each other through a costly battle of attrition, other players like Alliance and Canterbury Meat Packers are moving to source stock for longer periods by opening their own processing plants this season in the central and lower North Island.
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