The cash offer from Bounty Holdings New Zealand Limited, a wholly-owned subsidiary of Bounty Fresh Food, Inc., priced the shares at NZ$1.23 each, at a time when Tegel has seen a drop in share price and missed earnings forecasts as a result of a glut in chicken supply.
“Our intention is to acquire 100% of Tegel’s shares on issue, but we also welcome any shareholder that wishes to remain invested in the company’s future alongside us,” said Tennyson Chen, president of Bounty Fresh Food Inc.
"Bidco (Bounty Holdings) views the investment in TGH (Tegel Group Holdings) as a long-term, strategically important business to the Bounty Group with no short to medium term intention to exit," stated the Takeover Notice.
In a filing with the New Zealand Stock Exchange (NZX), Claris Investments Pte. Ltd. — Tegel’s largest shareholder with 45% or 160,157,782 ordinary shares — said it had accepted the offer.
David Jackson, independent chairman of the board for Tegel, said: “While noting the draft offer price represents a 50% premium to the NZ$0.82 close price of Tegel shares on 24 April 2018 on the NZX, the independent directors consider it too early to comment on the draft offer at this time.”
“In particular, the independent directors do not yet have full details in respect of Bounty’s proposed strategy for Tegel, which is something we are focused on.
“At this stage, we advise shareholders to take professional advice before taking any action with respect to their Tegel shares.”
Strategy for Asian growth
Bounty has stated that this is part of the company’s strategy for growth in Asian markets.
“Tegel is a leading brand in the New Zealand market with real potential to expand into international markets, particularly the Philippines where Bounty Fresh Group’s sales and distribution networks are extensive,” said Chen.
“We believe our Group is naturally aligned to Tegel, and our offer is motivated by a desire to further grow the Bounty Fresh Group beyond the Philippines.”
Reuters stated that the acquisition would be the largest outbound purchase by a Philippine company since August 2016.
In a “Receipt of Takeover Notice”, the Tegel board said the takeover was unsolicited by the board and Tegel, and that they have appointed an independent sub-committee of the board, comprising David Jackson (as independent chairman) as well as the other independent directors (Bridget Coates and George Adams).
Tegel has appointed Goldman Sachs to advise it on the Takeover Notice and the independent directors intend to appoint an independent expert to evaluate the merits of the offer.
“The Board will report to shareholders more fully in accordance with the Takeovers Code requirements, once this advice has been received and our assessment of the offer has been completed,” said Jackson.
Tegel accounts for more than half of New Zealand’s poultry production and employs about 2,300 people nationwide.