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Offeror(s): Lowe Corporation Limited
Independent Adviser(s): Polson Higgs & Co (Rule 21)
Offer Date: 23/10/2002
Offer Type: Full
On 24 September 2002, Lowe Corporation Limited (“Lowe”) announced an intention to make a full takeover offer for all the shares in Blue Sky Meats (NZ) Limited (“Blue Sky Meats”), an unlisted meat company operating in Southland. At the time, Lowe did not hold any shares in Blue Sky Meats.
The offer was for $4.50 per share, conditional on Lowe receiving more than 90% of Blue Sky Meats’ voting rights. Blue Sky Meats shares were trading on the unlisted market at approximately $3.45 per share prior to the takeover notice being sent.
On or about 25 September 2002, Horizon Meats NZ Limited (“Horizon”), Blue Sky Meats’ largest shareholder with 37% shareholding, entered into a lock-up agreement to accept Lowe’s offer. Horizon also agreed to terminate a marketing contract that Horizon had held since 1995 with Blue Sky Marketing (“BSM”) a wholly-owned subsidiary of Blue Sky Meats, and to transfer the “Horizon” brand to BSM for overall consideration of $2.7 million.
On 23 October 2002, Blue Sky Meats sent their target company statement and independent adviser’s report to shareholders. The report stated that the independent adviser could not make any determination as to whether $2.7 million was a fair value for the transaction with Horizon.
On 29 October 2002, the Panel considered that there were sufficient grounds for the Panel to consider that Lowe’s offer may not comply with rule 20 of the Code in that Horizon may be receiving more consideration for its shares than the other offerees. The Panel decided to make interim restraining orders under sections 33(d) and 33(h) of the Takeovers Act 1993, directing Lowe to refrain from taking any action in respect of its offer including processing any acceptances.
On 4 November 2002, the Panel convened a meeting under section 32 of the Takeovers Act 1993. At the meeting, the Panel’s expert adviser formed the view that the value of terminating the marketing contract and transferring the “Horizon” brand exceeded $2.7 million. This view was based on the profitability of the contract to Horizon and the length it had to run.
As such, the Panel determined that the consideration offered for the termination of the marketing contract in connection with the proposed transaction did not contain additional consideration to Horizon for the purchase of its shares, and that Lowe had acted in compliance with rule 20 of the Code.
Polson Higgs & Co prepared a rule 21 independent advisers report on the merits of the offer.