NZ Binxi backs out of $25.4 million Blue Sky takeover
NZ Binxi (Oamaru) Foods, a subsidiary of China-based Heilongjiang Binxi Cattle Industry Co, has backed out of its $25.4 million takeover of Invercargill meat processor Blue Sky Meats after missing the deadline to get regulatory sign-off and as wet and cold weather undermined earnings.
Blue Sky chairman Scott O'Donnell told shareholders Binxi pulled the pin on the deal after it didn't receive Overseas Investment Office approval by March 20, and that the wet and cold weather triggered a material adverse change in the meat processor's finances in that it reduced stock flows in the early part of the season and limited rendering when it wasn't prudent to irrigate rendering effluent.
"We expect that these issues will lead to significantly poorer than expected financial performance for FY17," O'Donnell said. "We as directors are very disappointed by Binxi's decision to withdraw the offer. Seasonal weather fluctuations are a well-known and inherent part of farming and the red meat industry."
Binxi Cattle Group built its stake in Blue Sky last year, becoming 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 planned to acquire Blue Sky to grow its New Zealand Binxi business.
The $2.20 per share offer crossed the 90 percent threshold needed to mop up the remaining shares, but was also contingent on getting OIO approval.
O'Donnell said the company is open to discussing an alternative deal with Binxi, and that a new business plan outlined at the company's annual meeting in January could create significant value over the next three years.
"Accordingly, we as directors will now look to implement, and arrange funding for, that business plan - with a view to maximising value for all shareholders," he said.
Blue Sky shares are listed on the Unlisted platform and last traded at $1.30, valuing the business at almost $15 million.