"We are about to create a big, strong company that will be a force in the industry and Eastpack is worried about their competitive position. I invite any Eastpack growers who are interested to ring me and find out why Eastpack is worried about us merging."
EastPack is New Zealand's largest post-harvest kiwifruit operator following its merger with Satara this year and chief executive Tony Hawken said his company did not regard Apata as a threat.
"We fully support further rationalisation in the industry," he said. "There are no issues there.
"We are asking what is the best way to maximise full value for Aerocool shareholders. Because of the timing, we hadn't been privy to the details up until receiving notification of the terms of the one-for-one share offer until just before Labour Weekend, so we had very little time to get our heads around it and look at it in depth."
The Apata due diligence process arrived at a maximum value of 35 cents for Aerocool shares, compared to EastPack's offer of 90 cents cash per Aerocool share.
Regardless of any perceptions over competition, EastPack's opposition to the merger was clearly also motivated by concerns about the value of its 3.5 per cent shareholding as a non-grower in Aerocool.
The company said it believed the merger would lead to an untenable position for minority shareholders.
"We will not remain as a shareholder if Aerocool proceeds with the amalgamation and will exercise our right to receive a fair and reasonable price for the shares we currently hold," said EastPack chairman Ray Price.
"We are also prepared to take up the challenge of ensuring that all minorities who elect to vote against the proposed amalgamation with Apata exercise their buyout rights and receive a fair and reasonable price."
One source suggested the takeover offer was largely aimed at placing a stake in the ground in terms of arriving at a share value in the arbitration process once EastPack seeks a buyout of its minority position.
EastPack said it believed the proposed exchange ratio of one Aerocool share for one Apata share was unfair from the perspective of Aerocool shareholders.
"As an Aerocool shareholder we are not willing to accept a 13 per cent reduction in net asset backing per Aerocool share when Apata shareholders are benefiting from a 17 per cent increase in net asset backing per share; and an increase in the total secured bank debt of the company from approximately $1 per tray to $1.88 per tray without clearly demonstrating how the company will service this level of debt."
Mr Weston responded that all of the post-harvest companies had debt.
"When you look at debt, you can say it's relevant to Psa as the volumes of kiwifruit are down so it makes debt servicing much more burdensome.
"But we are quite comfortable with our debt level and the banks are comfortable. They have confirmed the next three years of funding line so there is no issue there."
Neil Trebilco, president of New Zealand Kiwifruit Growers Inc, said that because Psa had reduced crop volumes, there was currently excess capacity in the industry.
"We don't expect that to last very long and the gold volumes are coming on, but the post-harvest companies are trying to find savings wherever they can and one of the ways of doing that is by amalgamating with others to make best use of their facilities. The other thing is that technology is moving on. If companies want to invest in technology, the larger they are, the easier it is to invest in that technology. "
