A takeover bid for food producer Affco Holdings by Talleys
Group is further evidence of a scramble for ownership of the
country's dairy manufacturing assets, according to
sharebroker Peter McIntyre.
Yesterday's offer for the 23.7% of Affco that Talleys does
not already own or has agreement to buy will increase its
shareholding in Open Country Dairy from 17% to about 47%
which, according to Craigs Investment Partners broker Peter
McIntyre, appeared to be the motive behind the move.
It was no coincidence the takeover bid by Nelson-based food
producer Talleys was announced in the same week Chinese
company Bright Dairy took over the processing and marketing
arm of Canterbury dairy processor Synlait Ltd, and
Singaporean-based Olam International made a takeover offer
for New Zealand Farming Systems Uruguay, Mr McIntyre said.
"Principally, their [Talleys] aim is to increase their stake
through acquiring Affco and therefore their stake in Open
In June, the Motueka-based food producer reached agreement
with Affco's second-largest shareholder, the Spencer family
investment vehicle Toocooya Nominees, to buy 23.46% of the
shares for 37c a share - the same price being offered for the
remainder of Affco shares.
Mr McIntyre felt the offer was too low, considering Talleys,
in March, 2006, offered 39c a share to take a majority stake
In the last year Affco's share price has ranged from 33c to
"They are not providing enough premium on the price. I think
they need to offer a higher price, say in the low 40s, to
entice remaining investors," he said.
Affco's third-largest shareholder is National Nom-inees NZ
Ltd, with 2.8% of the company's shares.
Mr McIntyre said corporate manoeuvring this week showed just
how seriously foreign countries viewed future food supplies,
and he believed Talleys' hand was forced by Olam moving on
New Zealand Farming Systems Uruguay (NZFSU) and Bright Dairy
on Synlait Milk.
Earlier this week, Bright Dairy announced an $82 million
takeover of Synlait Milk, which will enable the privately
owned Canterbury company to build a second milk drier,
upgrade to the manufacture of high grade infant formula and
gain access to the Chinese market.
Similarly, Olam this week offered 55c a share for the
remaining shares in NZFSU it did not own, in a move seen as
securing future food supplies from Uruguayan dairy farms
being developed by NZFSU in South America.
In the background is Chinese-backed Natural Dairy's attempt
to buy 16 Crafar family farms in receivership and plans to
establish a dairy processing factory.
Talleys is a privately-owned family business established in
1936 that produces seafood, vegetables and icecream.
It jointly owns with Affco a sheep processing plant at Awarua
Affco owns a further six processing plants in the North