Talley family to take over only listed meat processor Affco
The South Island-based Talley family – best-known for its fisheries interests – is looking to make a full takeover of Affco Holdings, the only meat processor listed on the NZX.
Talley's Group today signed a pre-bid agreement with Toocooya Nominees to make a full takeover bid at 37c a share, with Toocooya agreeing to sell its 23.5% stake in Affco: 118.5 million shares for $43.86 million.
Toocooya holds agricultural interests of the family of former pulp-paper millionaire John Spencer and the late Peter Spencer, one of the nation's biggest corporate meat farmers.
Talley's – which owns 52.8% of Affco (267m shares) – would own 76.2% of the company once it acquires the Toocooya stake. At 37c, the company would be valued at $870.28 million.
Affco owns 44% of Dairy Trust, owner of independent cheese maker Open Country Cheese, which Fonterra regards as a competitor for domestic milk supply. Another key stake is held by Singapore-based commodities dealer Olam International, which has 25%.
Last month Affco reported a 4% increase in interim profit to a net after-tax figure of $15.9 million in the six months to March 31 – up from $15.3 million in the same period last year. The net profit before tax of $21.88 million was up from $21.82 million last year.
The operating revenue of $547 million was $33 million lower than last year – the company said lower stocking rates and good weather encouraged farmers to retain stock.
"Our outlook for the full-year remains cautious with no improvement to the competitive landscape expected in the second half," the company said.
Founded in 1904 as the Auckland Farmers Freezing Co-operative exporting meat to Britain, Affco Holdings listed in 1995 after a debt restructure and a 100 million public share offer at 50c.
Its share price has seesawed from 52c on listing day to a miserable low of 15c in December 2002.
In October 2001 Talley's bought 10% of the company for 29.6c a share, a year after being beaten to a stake in Hawkes Bay's Richmond by Dunedin meat cooperative PPCS, now known as Silver Fern Farms.
In 2006 it boosted its stake to more than 50%, offering 39c when an independent valuation was for a price between 35c and 45c.
Toocooya didn't accept that offer from Talley's, complaining that it didn't fully reflect the company's underlying value. It also said in 2006 that Affco's future earnings and value "are potentially significantly higher than an analysis of the company's recent financial results would indicate."
Affco employs more than 2800 people at plants in the Bay of Islands (Moerewa), Waikato (Horotiu), Bay of Plenty (Rangiruru), Hawke's Bay (Wairoa), Wanganui (Imlay) and Feilding (Manawatu).
It also has a joint venture with South Pacific Meats at Motueka (Awarua) and hide plants at Napier and Wiri.