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06 November 2002
Takeovers Panel clears Lowe Corporation's offer for Blue Sky Meats
The Takeovers Panel met on 4 November 2002 to consider whether Lowe Corporation Limited (Lowe) had acted, was acting, or was intending to act in compliance with the Takeovers Code.
On October 9 Lowe made a full offer for all the shares in Blue Sky Meats (N.Z.) Limited (BSM) at $4.50 per share. Horizon Meats New Zealand Limited (Horizon) holds 37% (2,709,594) of BSM's shares and has a marketing contract with BSM.
If the takeover becomes unconditional Horizon is to be paid $2.7 million for terminating the marketing contract and the transfer of trademarks. This is in addition to Horizon receiving the same consideration per share that is to be paid to other shareholders.
BSM's target company statement of 23 October said, "… One shareholder (Horizon) may receive additional consideration for its shares which is different to the other shareholders …" and " … The effect of any over-compensation for terminating this contract could result in additional consideration being received by Horizon."
Subsequently on 29 October the Panel issued an order restraining Lowe from proceeding with its offer because it considered the offer may not comply with rule 20 of the Code in that Horizon may receive more consideration for each of its shares than other shareholders.
The meeting on 4 November 2002 was called to hear evidence and submissions from the parties and to determine whether Lowe would comply with rule 20 if Horizon was paid $2.7 million compensation for terminating the marketing contract in the event of the offer for Blue Sky becoming unconditional.
The Panel determined that the consideration offered for terminating the marketing contract did not contain additional consideration to Horizon for the purchase of its shares. The Panel is satisfied that the same consideration is being provided for all securities under the takeover and, accordingly, is satisfied that Lowe has complied with rule 20.
The Panel has, in its determination, expressed concern that the independent adviser, Polson Higgs & Co, Chartered Accountants did not make an assessment of the proposed payment of $2.7m to Horizon. In the Panel's view it was part of the adviser's role to do so. The Panel is also of the view that the directors of BSM had a responsibility to see that the issue of the proposed payment was properly addressed.
The interim restraining orders expire at 5pm today.
The full text of the Panel's determination is published on www.takeovers.govt.nz.