By LIAM DANN
He might control Australasia's biggest food group, but billionaire Graeme Hart's attempts to take a strategic stake in tiny Kapiti Cheeses appears to be in trouble.
The Kapiti Cheeses board yesterday recommended its shareholders accept an offer by independent dairy group United Milk to buy 100 per cent
of the company for $15 million - or $5.67 per share.
Hart's New Zealand Dairy Foods, which took a 10.3 per cent stake in the speciality cheese company this month, will today head to the High Court seeking an injunction to prevent Kapiti shareholders voting on a constitution change which would aid that sale process.
At the special meeting, scheduled for this Friday, shareholders are being asked to consider a constitutional amendment to reduce the threshold at which a buyer can acquire all shares, from 90 per cent to 75 per cent.
If it is approved, NZDF could be forced to sell its strategic stake just weeks after buying in.
Kapiti chairman John Butterfield said the amendment was proposed to preserve the integrity of the sale process and ensure it was fair.
He said the directors were confident of the strength of their position and would defend the legal action.
Kapiti was not a listed company and had only to meet the requirements of the Companies Act and its own constitution, Butterfield said.
With less than $20 million in assets, it is too small to be subject to the Takeovers Code.
Hart and NZDF declined to comment yesterday.
Butterfield said that if the sale of shares was blocked, an asset sale could still go ahead.
The United Milk offer allowed the option of buying all of Kapiti's assets, including the brand, for the same price, he said.
The sale of shares was still preferable, as it was quicker and less complicated, Butterfield said.
The board recommended the United Milk offer because it was the best price to emerge from the tender process, he said.
United Milk is a 50/50 joint venture company owned by a group of dairy farmers and supermarket chain Foodstuffs Wellington.
At its Palmerston North plant it produces milk and cream under the Farmgate brand and for the Foodstuffs Pam's brand.
It has been in business for two years and packs about 30 million litres of milk a year.
Chief executive Greig Shearer said United Milk had outperformed initial expectations and was now ready to expand.
