Rural delivery: Skewers drawn in complex Richmond saga

By TONY LEGGETT*

The ownership saga unfolding in the meat industry has more twists than a staple of fine merino fleece.

North Island meat company Richmond is at the centre of a two-way battle for control between South Island company Primary Producers Cooperative Society and newcomer North Meats.

In two days, North Meats will be free to compete with PPCS for up to 60 per cent of Richmond shares, on and off the Stock Exchange.

But shareholders must ask themselves if they want Richmond to become majority foreign-owned or remain in New Zealand hands.

North Meats is a hastily constructed subsidiary of Bernard Matthews, a successful poultry and red-meat processing and marketing company based at Norwich, England.

Bernard Matthews does have strong connections in Hawkes Bay. Advanced Foods is another fully owned subsidiary, which further processes lamb mostly for British supermarket customers through a plant at Waipukurau.

In fact, Bernard Matthews has long been touted as a possible friendly partner for Richmond by the group of influential Hawkes Bay farmers who formed the holding company Richhold to stave off the first PPCS takeover move on Richmond last year.

On the other hand, PPCS is a farmer cooperative, wholly New Zealand-owned, which is viewed with suspicion.

Its second foray into Richmond's share register has been similar to the first - full of acrimony and speculation about its real motives.

The Dunedin-based cooperative briefly owned 35.8 per cent of Richmond before being forced to sell after Richmond's board ruled it had breached the company's constitution when acquiring part of its initial stake.

PPCS sold to Hawkes Bay Meat Company, a subsidiary of Active Equities.

Even this was interpreted by some farmers as a clever ploy to "park" the shares until the dust had settled and PPCS could recover them without again breaching the Richmond constitution.

Suspicion increased when it was later revealed that PPCS had loaned Hawkes Bay Meat Company several million dollars to complete the purchase.

The doubts resurfaced when PPCS made its latest move on Richmond on May 17, finishing the day with 16.75 per cent of the company at $3 a share and saying it wanted to cooperate with its northern rival, not control it.

It blew its credibility days later when it was forced to issue a notice suggesting it may acquire up to 60 per cent of the company. That was interpreted as a hostile takeover by many Richmond suppliers and farmer shareholders.

Now the stage is set for another classic meat company ownership struggle.

At this stage, the money is on newcomer North Meats to pick up most of the shares offered on the market.

The company is considered a white knight by many supplier-shareholders who would prefer to sell to an overseas company than PPCS.

One option is for PPCS to sell its shareholding, which would still earn the company a tidy profit.

However, it has come too close to a substantial shareholding for the second time to lose it so easily this time.

Its best option is off-market, through its strong connection with the 35.8 per cent of Richmond owned by Hawkes Bay Meat Company.

But even wily PPCS will struggle to come up with the $40 million to $50 million required to buy it outright.

Everyone has a price, and it is time for PPCS to find out what it will take for Richmond shareholders to sell to it.

* Tony Leggett edits the rural newspaper Country-Wide.