S.F.M. shareholders ‘spurn merger’

Press, Volume CXV, Issue 33777, 25 February 1975, Page 18

S.F.M. shareholders ‘spurn merger’

Southland Frozen Meat and Produce Export Company, Ltd, would seem to spurn a merger, but to seek control of New Zealand Refrigerating Company, Ltd, on the cheapest possible terms.

This suggestion is made by the chairman of New Zealand Refrigerating (Mr C. S. Peate) in a letter to shareholders telling them of the developments since S.F.M.’s first offer.

"It seems that the members of the S.F.M. board, contrary to the advice of its chairman, general manager, secretary, solicitor, and financial consultant, do not want a merger,” Mr Peake says in his letter. "They appear to seek control, through .the bare minimum of stockholding in the invaluable worldwide assets which N.Z.R. has taken 94 years to accumulate. That is the only comment I now make.” says Mr Peate. Offer rejected With Mr Peate’s letter is| a copy of the joint state- ] mem both chairmen would have made last Monday to the stock exchange had not the S.F.M. board rejected the! recommendations of its own negotiating committee. This statement shows thati the two negotiating commit- 1

tees agreed on a merger plan on the basis of the S.F.M. shares, plus five S.F.M. five-year 12J per cent secured convertible notes for eight N.Z.R. shares plus 22c for fractions. This offer included no cash (other than for fractions), in contrast to the first offer from S.F.M. which was subsequently rejected by the N.Z.R. directors. This offer was seven S.F.M. shares for eight N.Z.R. shares plus 10c each a share plus 20c cash for fractions. This offer was to be unconditional whenever S.F.M. declared it so.

The merger plan agreed to by the two negotiating committees was to become unconditional automatically when N.Z.R. shareholders holding 51 per cent of the voting strength and 75 per cent of the issued shares accepted the offer to be made.

By contrast the latest offer from S.F.M.—announced on Friday after the S.F.M. board refused to accept the earlier recommendations —is one S.F.M. share for one N.Z.R. share plus 10c cash, to become unconditional only

when S.F.M. deciares it to before June 27.

Under the merger plan five N.Z.R. directors were to be appointed to the S.F.M. board, and five S.F.M. directors to i the N.Z.R. board, while the holding company’s head office iwas to be in Christchurch. In the latest substituted I offer five N.Z.R. directors are i to be nominated to the S.F.M. board, but no provisions are made regarding the constitution of the N.Z.R, board, while the question of the location of head office is unspecified. Mr Peate quotes from his own letter to the chairman of S.F.M. (Mr A. F. Gilkison). written after the refusal by the S.F.M. board to accept the merger terms:— "You must be disaonointed at your board’s failure to accent the urging of the S.F.M. negotiating committee to make the offer you all recommended. From the enclosed copy of a letter I today sent to our stockholders you will see that I have not slammed the door. In it, there are mentioned neither the names of the members of> the committee nor the terms in the plan. Explanation “In the interests of the industry and the staff and shareholders of both companies I whole-heartedly agree with you that any ‘get together’ should he on a cordial and co-operative basis. Although wounds heal, scars remain. With all the goodwill in the world and with no suggestion that N.Z.R. is fearful of the outcome of an open breach, regrettable as that may be, I suggest you ask your board to reconsider the recommendations which your negotiating team made to it. That team is cnmnetent and experienced. Their views should not be lightly disregarded. I reneat the offer we made on Friday—we would make Dr Lau available at any time, should your directors want any enlightenment or explanation from him.” Mr Peate says that the directors, at the annual meeting on Thursday, will explain and discuss with the shareholders all the implications of the offers. After that, they would be in a better position to recommend a course of action, he says. Meanwhile, shareholders should not consider the offer.