Notification of a $25.3 million offer for Invercargill-based meat processor Blue Sky Meats has been received by the Unlisted share platform.
NZ Binxi (Oamaru) Foods Ltd, a subsidiary of the Chinese meat company Heilongjiang Binxi Cattle Industry Co, gave notice on 4 November of its intention to make a takeover offer for 100 percent of the shares in Blue Sky Meats.
The shareholder letter from Blue Sky Meats chairman Scott O’Donnell states that a formal offer to shareholders of $2.20 per share will be made by Binxi between 14-30 days of the notice. Shareholders will then have 90 days from the date of the offer to decide whether to take them up or not.
He explained that the company started to look for a buyer for Blue Sky or the Blue Sky business earlier this year and consultants BDO New Zealand were appointed to help identify suitable parties. Binxi showed interest, presented a proposal and decided to proceed with the takeover notice.
Investment banking and corporate advisory firm Campbell MacPherson is assessing the merits of the offer in an independent adviser’s report. This, together with the Board’s formal response to the offer, the Board’s recommendation and a target company statement will be sent to Blue Sky shareholders either with the offer or will follow within 14 days.
The offer will be conditional on Binxi receiving a minimum acceptance of 90 percent of the shares (or, if waived by Binxi, a minimum acceptance from Blue Sky shareholders of 50.1 percent of the shares). Binxi will also need to obtain the necessary consents under the Overseas Investment Act.
Binxi is the company which bought Lean Meats Oamaru last December, from Progressive Meats, after having held 25 percent of the shares in the Oamaru company for the two years prior.
Blue Sky Meats’ annual report released in June showed an after tax loss of $1.9 million, which former chairman Graham Cooney put down to the new Gore beef plant, purchased from Clover Exports in December 2014, which was closed for capital expansion at the time of an unprecedented large cow kill at calving time.
“The company was therefore not in a position to take advantage of the stock availability,” he said, adding that it led to a change in stock processing patterns through the rest of the season.
No dividend was paid to shareholders by the company this year. Effective procurement and optimising processing capacity remain critical to the company’s future.
Scott O’Donnell replaced former chairman Graham Cooney, who retired from the Blue Sky Meats board earlier this year. Company general manager Ricky Larsen departed last December. His replacement is Todd Graves who joined the company recently.
The company entered into a marketing agreement with venison processor Duncan NZ Ltd in mid-2015.