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Southern Lamb Investments has officially made a full takeover offer for all of the shares in Blue Sky Meats at $3 per share.
It has sent the offer document to all shareholders, while an independent committee set up to consider the offer, would send the target company statement, including the committee’s recommendation and an independent adviser’s report on the merits of the offer, by April 1.
Earlier this month, a takeover notice was lodged for the Southland-based meat processor by interests associated with its chairman Scott O’Donnell and director Andrew Lowe.
In a letter to shareholders, independent committee chairwoman Sarah Brown said the meat processing sector, including Blue Sky, was experiencing very favourable trading conditions.
In the seven months to January 31 this year, Blue Sky’s earnings before interest, tax, depreciation and amortisation (ebitda) was $11,358,777 (based on unaudited management accounts). That represented a 1340% increase in earnings in comparison to ebitda in the prior comparative period, being a loss of $915,817 for the seven months to January 31, 2021.
The target company statement and independent adviser’s report would contain further commentary on Blue Sky’s financial performance, including risk factors that could adversely affect the company’s earnings in the remaining months of the current financial year and the future financial years ending in June 2023 to 2026.
The significant improvement in the company’s financial performance was relevant to how Blue Sky would meet capital expenditure requirements, Ms Brown said.
Southern Lamb has indicated that, if the offer was successful, it might require Blue Sky to undertake a $30 million pro rata offer of new shares to shareholders to fund capital expenditure.
The independent committee did not necessarily agree that this funding was required. It was working with management to understand expected future cashflows and would update shareholders in the target company statement.
The offer was open for acceptance until 11.59pm on Friday, May 6, unless the closing date was extended.
Shareholders could accept the offer at any time up to the closing date, although the committee confirmed its earlier recommendation that they should not take any action until receiving the target company statement and independent adviser’s report.