PEP agrees buyout of Australia's Patties

The deal will see PEP pay A$1.65 per share for the 139 million outstanding shares of Patties, including a special dividend of up to A$0.25 per share. Alternatively, Patties shareholders may choose to receive class B shares in the acquisition entity Australian Foods Holdco in exchange for 50-100% of their Patties shares, with the rest paid for in cash. In addition, eligible shareholders will receive a benefit of up to A$0.107 per share from franking credits, according to a regulatory filing.

Patties first announced PEP's preliminary offer at the end of May. The details of the official offer are largely the same as those previously indicated. PEP's offering price represented a premium to the stock's price of A$1.33 prior to the announcement; the price has since risen, with the stock trading at A$1.68 in the afternoon of June 3.

The deal is expected to close in September, subject to shareholder approval. Members of the Rijs family, which founded Patties and hold a 36.6% interest in the company, have already indicated they will vote to accept the offer. PEP must also request approval from Australia's Foreign Investment Review Board.

Patties' products include the well-known Four'n Twenty meat pie brand and the Nanna's line of frozen desserts, but the company hit a rough patch last year when contamination fears led to a recall of Nanna's Frozen Berries. The company reported a drop in revenue in its half-year results from A$138 million for the six months ended December 2014 to A$126 million for the six months ended December 2015. Over the same period profit fell from A$16.7 million to A$16.2 million. Patties sold the Nanna's frozen fruit line last December.

"Whilst the board remains confident in management's plans for growth and innovation in the core brands and the business is experiencing strong momentum, the scheme represents an attractive value for shareholders," said Chairman Mark Smith, announcing the recommendation of Patties' board that shareholders accept the deal.

PEP has a history of food-related takeovers in Australia. The GP bought Irish food giant Kerry Group's Australian bakery unit Pinnacle last year for a reported A$250 million; it has also exited several similar investments in recent years, including Griffin's Foods and Peters Ice Cream.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Australasia
• Consumer
• Buyouts
• Buyout
• Australia
• Pacific Equity Partners