Meat industry gets its share of attention

Press, 11 May 1981, Page 26

Meat industry gets its share of attention

by

ADRIAN BROKKING

r, commercial editor

The New Zealand sharemarket boom continued last week and prices rose strongly over a broad front. The N.Z.U. index put on 18.72 points to close at 671.99 — a rise of 2.9 per cent. Since the beginning of the year market capitalisation has improved 22.9 per cent. Many of the rises were well into double figures; those in the centre of takeover speculation stood out — none more so than CFM, which gained 60c to 370 c after another foray by the Primary Producers Cooperative Society. This is the third buying exercise into CFM shares by PPCS in less than a year, during which time CFM shares have jumped from 201 c to 370 c. The CFM directors have come out strongly against the PPCS move, which, however, succeeded in one day. Defence against this type of take-over is not easy. Perhaps the most successful move on the part of CFM might be to engage in a takeover itself, as any large issue of shares would obviously dilute the PPCS holding. This is a matter of great interest to the sharemarket, of course, and it is perhaps

not surprising that SFM shares rose 23c during the week. SFM has been linked by market rumours with CFM, especially after the announcement by the CFM board that they were engaged in negotiations which might lead to a “significant” expansion of the company. At this stage, a CFM-SFM combination seems unlikely. At the same time, assuming that the move is within the meat industry, and would have to be approved by the Examiner, there is not much room to manoeuvre. In the South Island, the most likely prospect would seem to be the Ocean Beach works of the British Co-operative Wholesale Society. Anaylsis of last week’s share sales shows that considerable buying was done by inteests other than PPCS. These interests- may be assumed to be friendly to CFM, on the basis that whatever shares they acquire the PPCS cannnot get. Rumours have it that these friendly interests are associated with Challenge Corporation, or rather Fletcher Challenge, which is said to have bought so far a little more than 10 per cent of the CFM

capital. It may be significant that the two companies have two directors in common, Mr J. Fair and Mr I. E. OMcKellar, who is CFM's chaiman. If there is any truth in this, the Challenge interest can only be for investment purposes, and probably only temporary at that. Challenge can hardly build a CFM stake so large that it might have to make a formal takeover bid — the parallel with the Allied Farmers-Hellaby take-over is too obvious, and the Examiner of Commercial Practices is bound to come to the same conclusion. Allied Farmers has withdrawn its bid for Hellaby’s ostensibly on the grounds that it was not prepared to go through a protracted case before the Commerce Commission, with all the uncertainty involved for the shareholders of both companies. But it is doubtful if this take-over would have succeeded in any case. It has not done the Hellaby shareholders any harm either: the 100 c shares were selling at 160 c . before the offer — now after splitting to 50c shares they are selling around 135 c with a one-for-four bonus issue to come.