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Saturday 25 June 2022

Seeka makes case for $60m OPAC acquisition

12th April 2021 By Bridget O'Connell | | @foodtickernz

Seeka’s proposed $60m purchase of rival kiwifruit company Opotiki Packing and Cool Storage will create New Zealand’s largest kiwifruit grower with annual revenue of £300m – but it is far from a done deal.

According to the listed kiwifruit grower’s presentation pack for the takeover, the deal would be called off should more than 5% of OPAC shareholders be looking at the acquisition as a chance to cash out.

Te Puke-headquartered Seeka also said the deal could be pulled unless it could get commitment from OPAC’s major growers to supply the enlarged business with enough fruit for the 2022 and 2023 seasons.

At the end of last month, Seeka announced it had tabled a $59m bid for its East Cape-based rival in a deal that would see the combined business handle around 25% of New Zealand’s kiwifruit crop, and offer a comprehensive service to Zespri across the North Island’s main growing regions.

The boards of both companies have recommended the deal proceed, which Seeka said would deliver savings of up to $3m a year and increase earnings per share. The new entity would be New Zealand’s largest kiwifruit grower and second-largest post harvest operator.

OPAC shareholders would be offered 1.4833 new fully paid ordinary shares in Seeka for every OPAC share they held.

If they approved the deal, then OPAC shareholders who voted “no” and exercised minority buyout rights would be entitled to receive their entitlement in cash

However, if OPAC shareholders holding more than 5% of OPAC shares on issue voted “no” and elected to receive cash, then Seeka might elect not to proceed with the acquisition.

The purchase, which would increase Seeka’s fruit volume by 25%, or 8 million to 8.5 million trays, also hung on future commitments from OPAC growers who had a higher pack price than Seeka.

Seeka asked that major growers, who in 2021 would supply circa 75,000 trays to OPAC, and other growers back the deal and commit to supplying in the 2022 and 2023 seasons.

It required commitments that “at least 80% of total 2021 estimated kiwifruit volumes by tray” would be forthcoming for 2022 and 2023 as “without such commitments the acquisition may not proceed”.

Seeka proposed the issue of around seven million new shares to buy OPAC’s circa $34m of assets, with the balance of the transaction comprised of $25m of assumed debt.

The offer would need to be approved by 75% of OPAC shareholders who would vote at the company’s annual meeting on 13 April. For Seeka, the threshold was 50% of shareholders with a vote to take place at its annual meeting on 16 April.



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