By IRENE CHAPPLE
The takeover bid for Gisborne vegetable processor Cedenco Foods by SK Foods International has been knocked by a report which says it is unfair.
Californian SK Foods, which already owns 59.1 per cent of of Cedenco, has offered $2.05 a share.
The report by independent adviser Grant Samuel found the
full underlying value of Cedenco shares was between $2.14 and $2.74.
"As SK Foods offer ... falls below Grant Samuel's range, it is not fair," it said
The report said it took various issues into account, including that the SK Foods' majority holding was a "significant impediment" to any other offer and one was unlikely.
Shareholders who did not accept the SK Foods offer risked it lapsing, and shares were likely to continue trading below the takeover price.
It also noted that if SK Foods did not get enough acceptances to pass the acquisition hurdle of 90 per cent, it could increase its shareholdings by 5 per cent a year using the "creep" provisions of the Takeovers Code.
But it was unlikely to achieve the 90 per cent level without increasing the share price.
In February, Cedenco said it was suspending dividends for at least three years, saying it needed capital to explore "growth opportunities".
In April it posted a 65 per cent increase in first half profit to $2.12 million.
The SK Foods offer closes next month. Yesterday, Cedenco's share price fell 2.38 per cent to $2.05.
