Tegel flies the NZX nest after latest takeover

"NZ's favourite chicken for over 50 years," crows the Tegel website. But this month the company putting Tegel on our tables will go through its fifth ownership structure in less than 15 years, being sold to a private Philippines chicken company and delisted from the New Zealand and Australian Stock Exchanges. 

Trading of Tegel Group Holdings shares will be suspended at the close of trading today to let Philippines poultry company Bounty Fresh Foods mop up the minority shareholders. The stock will then be de-listed on October 23.

Bounty crossed the 90 percent threshold needed for a compulsory takeover of Tegel in August, offering $1.23 a share, which valued the NZ-based poultry group at $437.8 million. The Philippines company declared the takeover unconditional last month after the Overseas Investment Office signed off on the deal.

On the other hand, the OIO last week turned down Tegel's application to build a mega-chicken meat farm near Dargaville. The company has also been under attack from animal rights groups for marketing their chicken as "cage-free", when cages are illegal for broilers (meat chickens) in New Zealand.

It's been a turbulent few years for the company, with overseas private equity firms arguably getting the largest financial rewards from our chicken. Tegel was:

- bought by US ketchup-maker Heinz in 1992 as part of its purchase of Goodman Fielder;

- sold by Heinz in 2006 to Australian private equity fund Pacific Equity Partners for around $250 million. PEP later flicked almost 27 percent to ANZ Capital;

- sold to Asian private equity fund Affinity Equity Partners in 2011 for around $600 million, including $256.1 million in cash and $342.7 million of debt. At that stage the chicken company was generating annual revenue of $470.8 million, and that grew to $615.4 million in the 2018 financial year. 

- floated in 2016. The public offer raised about $284 million, of which $132 million was earmarked to repay bank debt. About $129 million covered the redemption of existing redeemable shares, $23 million covered the IPO costs, and a tiny $1.2 million was retained by Tegel. Affinity Equity Partners retained a 45 percent stake after the float, which it sold to Bounty for around $197 million earlier this year.

Bounty lodged its formal takeover bid in May, after securing the AEP stake and a further 13 percent of the company. The bid got the blessing of Tegel's board in June, which said the price was fair and Bounty's majority shareholding would create uncertainty for minority investors. 

The $1.23 offer was a premium to the 82 cents the shares traded at before Bounty's interest emerged. However, the stock had struggled since its 2016 initial public offering when it was sold at $1.55, the lower end of the $1.50-to-$2.50 range it was seeking.

The stock traded up to $1.78 a share on the NZX in August 2016 and hit A$1.70 around the same time. But it slumped to $0.81 and A$0.78 in March this year.

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