Thursday 08 December 2016 10:25 AM
Blue Sky Meats urges shareholders to wait for more information on Binxi takeover
By Tina Morrison
Dec. 8 (BusinessDesk) - Blue Sky Meats has recommended shareholders wait for more information from the board on the
future prospects of the meat processor before deciding on a takeover offer from China-based Heilongjiang Binxi Cattle
Industry Co, which is at the top of an independent valuation range.
NZ Binxi (Oamaru) Foods, a subsidiary of the Chinese company referred to as Binxi Cattle Group, is offering $2.20 per
share for the 86.5 percent of Blue Sky that it doesn't already own. Independent adviser Campbell MacPherson values Blue
Sky's shares between $1.93 and $2.21 apiece, according to a report sent to shareholders yesterday.
Binxi Cattle Group built its stake in Blue Sky earlier this year, elevating it to the third-largest shareholder behind
Lowe Corp and HW Richardson Group. It operates a vertically integrated beef business in China, owns New Zealand meat
processor Lean Meats Oamaru and wants to acquire Blue Sky to grow its New Zealand Binxi business.
Invercargill-based Blue Sky, which operates two meat processing plants in the South Island, posted a loss in the year
through March, paying no dividend, as it was hurt by its Gore beef processing plant being closed for capital expansion.
The company has a new board following the retirement of three long-standing directors earlier this year, appointed new
chief executive Todd Grave in October, and says it's in the early stage of working on a new three-year strategic plan to
achieve significant operational efficiencies and business improvements.
Blue Sky's board recommended in a letter to shareholders yesterday that they take no action on the offer to allow the
board and management further time to work on its strategic plan, which will enable it to be better placed to offer
guidance on Binxi's offer. It said it would provide advice to shareholders in mid-January, before Binxi's offer closes
on Jan. 31.
Binxi Cattle Group's offer is conditional on it receiving acceptances for at least 90 percent of Blue Sky shares, which
will enable it to compulsorily acquire all of the remaining shares. It can waive that condition, but can't declare the
offer unconditional unless it receives acceptance taking its holding to more than 50 percent. The offer is also
conditional on the Chinese company obtaining consent from New Zealand's Overseas Investment Office.
Blue Sky shares last traded at $1.30 on the Unlisted platform, valuing the company at $15 million.
(BusinessDesk)