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Germany's BayWa to buy GPG's stake in Turners & Growers, makes full offer

Thursday 10th November 2011

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Germany’s BayWa AG agreed to buy Guinness Peat Group’s 63.5 percent stake in Turners & Growers for $137.4 million and made a full takeover offer for the fruit and vegetable marketer.

BayWa is offering $1.85 a share for Turners & Growers, an 8.8 percent premium to yesterday’s closing price. It has signed a lock-up agreement with GPG, meeting its minimum requirement for a full bid of having at least 50 percent of the target company, according to a statement lodged with the NZX today.

The deal is contingent on approval from the Overseas Investment Office, which has this year given the green light for German interests to buy tracts of farmland throughout the country. It also needs approval from the German Federal Cartel Office

Turners & growers stock fell 0.6 percent to $1.69 in trading today. The offer values T&G at about $216.5 million, almost $20 million above the market capitalisation of $197.7 million.

“GPG supports BayWa’s proposed offer and believes that it is attractive,” GPG chief investment officer Anthony Eisen said in a statement. “I expect that BayWa’s expertise will assist Turners & Growers to continue its successful expansion into international markets.”

GPG’s sale comes as the investment vehicle winds down after several years of underperformance and an overhaul of its governance last year. It made a $158 million return to shareholders this year.

GPG sold its 19.4 percent stake in Turners Auctions in September in an off-market transaction to a range of investors including Milford Asset Management.

That leaves insurer Tower as the last of GPG’s New Zealand listed investments, of which it holds 34 percent.

Munich-based BayWa has interests in agriculture, building and energy, and its fruit business is the Germany’s biggest dessert pipfruit supplier, of which about 15 percent is organically produced, according to its website.

“The takeover of New Zealand's leading fruit trader will also allow us to expand our domestic fruit business,” BayWa chief executive Klaus Josef Lutz said in a statement. “The different harvesting seasons in the various countries means that we will now be able to supply food retailers in Germany throughout the whole year.”

The different harvest season will give the German company year-round fruit supply, and open access to Asian markets, he said.

The takeover document says BayWa will delist T&G if it secures 90 percent of acceptances that would enable it to force a compulsory sale for the rest of the company, but the deal doesn’t rest on it winning full control.

If the offer is declared unconditional, BayWa said it intends to run keep running T&G as a standalone business for the first nine to 12 months and support management plans. If it doesn’t secure full control, it will seek two seats on the board, including the chair and move for a strategic review of operations that may involve the sale of certain assets.

“BayWa would work with management and growers to learn and build relationships/trust, and get to know in more detail the business and related risks and opportunities, together with the most effective way to introduce BayWa’s plans,” the offer document said.

The German company said it wants to improve T&G’s operational efficiency and streamline distribution, and boost profitability and the volume of apple exports. It will refocus on apple production and improve relations with growers and well as review T&G’s investment in land.

BayWa’s shares, which are listed on the Frankfurt Stock Exchange, fell 1.9 percent to 30.705 euros in trading yesterday, and have shed 4.4 percent this year. The company’s market capitalisation is 1.07 billion euros and the stock is rated an average ‘outperform’ by 12 analysts compiled by Reuters.

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