An independent report suggests Talley's Fisheries may not get the shareholder support it needs to lift its stake in Affco to 42 per cent.
The report, by adviser Deloitte Touche Tohmatsu, notes that Peter Spencer's Toocooya Holdings, which holds a 20.8 per cent stake in Affco, is preparedto support Talley's lifting its stake to no more than 40 per cent.
Talley's, which already holds 26 per cent of Affco, has conditional agreements to buy Hugh Green Investments' 11 per cent stake and a 4.6 per cent parcel from Dairy Meats.
Under the Takeovers Code, Talley's must make a general bid for at least 50 per cent of Affco unless the transactions are approved at a special meeting of shareholders on July 30.
The report says Toocooya's stance suggests that it is prepared to let one but not both of the transactions proceed.
As parties to the transactions, Talley's, Dairy Meats and Hugh Green Investments will not be allowed to vote.
They will need the majority support of shareholders who have the remaining 58 per cent.
Spencer and Toocooya will play a key role in the outcome.
If the transactions are approved, Talley's will be in a position to exert more control over Affco, the report says.
Although Talley's would not technically be able to pass ordinary resolutions single-handedly, it would be in a much better position to do so.
Even if just one of the share buys was approved, the balance of control would shift in favour of the large shareholders, the report says.
Talley's has said it will not act in concert with any one shareholder but if it independently reached the same decision as Toocooya, their combined shareholding would be greater than 50 per cent, giving them significant voting control over the meat processor.
