NZ: Synlait Farms recommends Shanghai Pengxin-backed takeover proposal
Board backs takeover approach for Synlait Farms
The board of Synlait Farms has recommended shareholders accept a takeover proposal from a consortium of investors, including Chinese firm Shanghai Pengxin Group and the dairy group's management.
The takeover offer comes from SFL Holdings, a consortium of three investors - New Zealand Standard Farm Limited, a subsidiary of Chinese company Shanghai Pengxin, current Synlait MD and CEO Juliet Maclean and John Penno, who has a seat on the Synlait board.
The consortium is offering NZ$2.10 in cash per share, a 31% premium of the last traded price for Synlait Farms shares on the Unlisted exchange.
Due to the conflict of interest - with two members of Synlait's board also part of the takeover bid - the board formed a committee of independent directors to review the proposal.
The committee recommended shareholders take up the proposal. "The offer price represents full value for shares in Synlait Farms. The valuation range determined by the Independent Adviser was $1.86-$2.02 per share and the offer is a 4% premium to the top end of that range. In the 2013 audited accounts of Synlait Farms, the equity value of the company translated to $1.94 per share (prior to any transaction costs), and the offer is an 8% premium to this," the committee concluded.
The offer is conditional on a 90% uptake. Maclean and Penno already hold around 50% of Synlait's share capital. The offer period ends in early December.
Prior to the takeover proposal, Synlait Farms had been assessing options to raise capital.
Synlait Farms is a corporate dairy farming business that operates 13 dairy farms with standard milk supply contracts with Synlait Milk, a dairy processor that has operated on a stand-alone basis since 2010 and trades on the Australian Stock Exchange. Synlait Milk is unconnected to the transaction.
The move comes amid increasing interest in New Zealand milk suppliers from Chinese companies, who are seeking reliable and safe sources of raw milk to meet growing demand in China.
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