North Meats steps back from Richmond battle

By PHILIPPA STEVENSON

Bernard Matthews' subsidiary North Meats will not mount a rival takeover bid for meat company Richmond.

Last month North Meats became Richmond's fourth-largest shareholder after buying 4.3 per cent of the company from Waitotara Farmers Holdings, controlled by Richmond director Rod Pearce.

Southern co-op PPCS has made a $3.05-a-share bid for Hastings-based Richmond, the latest chapter in a six-year battle for control of the country's biggest meat processor.

The Richmond opposition to the PPCS bid had tipped North Meats, owned by British turkey king Matthews, as a potential bid-blocking saviour, perhaps with Hawkes Bay's Graeme Lowe, who recently picked up 8.1 per cent of Richmond.

But yesterday North Meats chairman Norman McRae said his company, which buys from Richmond for its processing plants at Waipukurau and Gisborne, did not want to be a major shareholder in Richmond.

"We don't wish to take the company over but what we would like to do is protect our [supply] arrangements there and we believe we can do that by being a minority shareholder."

Some Richmond shareholders were keen to sell to North Meats but it would not decide whether to lift its stake further for at least a week, McRae said.

The decision would hinge on the uptake of PPCS' offer. If PPCS got 90 per cent of Richmond by itself or with the voting support of other shareholders, "that would not be a good position for us to be in".

Uncertainty surrounding Richmond meant McRae could not say what level of PPCS shareholding in Richmond North Meats would be happy with.

PPCS owns 52.5 per cent of Richmond, but a High Court-imposed penalty for securities law breaches meant it has launched the takeover from a level of 43 per cent.

If PPCS fails to get 90 per cent acceptance of its bid by February 28, it will lose the voting rights in the 43 per cent too.

There are three appeals over the High Court rulings against PPCS, scheduled to be heard in April.

PPCS is appealing against Justice William Young's entire judgment and the penalties.

Richmond's appeal is over a small block of shares, the Nelson shares, retained by PPCS after it was forced to sell a 34 per cent stake in Richmond in 2000 when the Richmond board found acquisition of the stake had breached the company's constitution. Richmond's argument is that the Nelson shares "contaminated" all shares subsequently acquired by PPCS, making them defaulter securities.

In its independent appraisal of the PPCS offer, advisers Ferrier Hodgson said that if the Richmond appeal succeeded, it could require PPCS to sell all its shares, including those acquired under the offer.

The Bell Group contends that PPCS must either acquire 90 per cent or dispose of all its shares in Richmond.

Suggestions that the Appeal Court will be asked to hear the appeals earlier than April have not been confirmed by Richmond.

McRae said he could only look at the changing situation. North Meats had not talked to PPCS but had had discussion with Lowe which he would not elaborate on. Lowe was unavailable for comment.

"With the appeals coming up, we can't be guaranteed the Court of Appeal will support the findings of Justice Willie Young, give the voting rights back or reinstate the other shares.

"We're biding our time and we'll make the best decision we can when we have to make it."

PPCS chief financial officer Keith Cooper said PPCS regarded the takeover, launched on January 23, as starting only from this Monday after it had cleared a Takeovers Panel ruling at the weekend and, earlier, an appeal to the High Court.

PPCS was required to notify the Stock Exchange as soon as it had 1 per cent acceptances, which had not yet occurred, he said yesterday. The bid closes on February 26.