Norgate’s $4.70 bid outflanks Fonterra

Craig Norgate

Former Fonterra boss Craig Norgate has outflanked his old employer for the second time this year to take pole position in the race to buy rival rural services company Williams & Kettle.

Wrightson - which Norgate's Rural Portfolio Investments took over in June - yesterday declared its intention to make a full takeover bid for Williams & Kettle.

The $4.70-a-share bid values the company at nearly $105 million.

It follows Friday's showdown between Wrightson and a Fonterra and Pyne Gould Guinness partnership.

Fonterra and Pyne Gould made a joint stand in the market for a cornerstone stake in Williams & Kettle.

That prompted Norgate and Wrightson to outbid them.

Norgate had been widely tipped to push for further rationalisation in rural services after the hostile takeover of Wrightson.

But the news that Fonterra had started bidding prompted him to move earlier than he had planned.

Since being dumped as Fonterra's chief executive, Norgate has stayed one step ahead of the giant dairy co-operative in rural services.

Rural Portfolio Investments' takeover of Wrightson was also interpreted as a victory over Fonterra, which had long held a cornerstone stake in the company but was eventually forced to sell to Norgate.

Yesterday, Fonterra and Pyne Gould formally withdrew from their market stand for 10.1 per cent of Williams & Kettle.

Williams & Kettle has previously declined invitations to discuss mergers from its rural services rivals. But Friday's bidding war changed all that.

Chief executive Paul Macfie said the arrival of a new cornerstone stake holder meant it was time to sit down and talk about the future.

Directors of both companies met at Williams & Kettle's head office in Hawkes Bay yesterday.

Wrightson chairman Keith Smith described the offer as "friendly and aimed at ensuring that there is an orderly and logical process to achieve consolidation".

The success of the offer will ultimately hinge on wily corporate figure Sir Selwyn Cushing.

A long time director of Williams & Kettle, he holds a 19.9 per cent stake.

He is not allowed to sell his stake for another 12 months - a clause left over from a complex restructuring of the company's equity last year.

But if directors and shareholders decide they want the bid to succeed they can agree to waive that clause.

Cushing reserved his judgment on the offer price yesterday.

"We'll wait and see," he said. "What I thought was a good price last week might not sound like such a good price this week. Goodness knows what it might be next week." 

The bid

* Wrightson intends to offer $4.70 for 100 per cent of rival Williams & Kettle.

* That values the company at nearly $105 million.

* Shareholders will be offered a choice of cash or a combination of cash and Wrightson shares.

* Wrightson bought 19.9 per cent of Williams & Kettle in an on-market stand last Friday.