Cedenco Foods Ltd said today it had given consent to its 54 per cent owner, SK Foods of California, to buy the 50 per cent interest in Cedenco Australia Ltd, currently owned by Cerebos.
The joint venture with Cerebos was formed in 1996 to establish Australia's largest processing operation producing tomato,
apple and other fruit and vegetable ingredients for supply to Cerebos and other branded food manufacturers.
SK Foods, a leading Californian processor of bulk food ingredients, acquired its interest in Cedenco from Brierley Investments Ltd and Mangatu Investments Ltd in May last year.
The decision to support the transaction between SK Foods and Cerebos was taken by the Cedenco directors, who are independent of SK Foods, Cedenco said in a statement.
Ownership of Cedenco Australia would bring substantial benefits to Cedenco and opening new opportunities in Australia, the statement said.
"Although Cedenco Australia's performance continued to improve in the latest financial year, as outlined to Cedenco's shareholders at their last annual meeting, the full potential of the business could best be realised under a restructured ownership."
As part of the deal, Cedenco Australia will renew a long-term supply agreement with Cerebos to supply Cerebos and its related companies with its tomato and apple paste and diced tomato requirements in Australia and New Zealand.
Completion of the purchase is anticipated by March 1.
Management of Cedenco Australia will be through a joint venture management committee with management supervision delegated to Cedenco. SK Foods will provide technical and marketing assistance.
Cedenco's involvement in the transaction requires approval of those of its shareholders not associated with SK Foods. A special meeting to approve the deal will be held on February 18 following the annual meeting and will include a report of an independent appraiser.
Cedenco were untraded today after closing at $2.42 on Friday.
- NZPA
