Sunrice shareholders turn down Ebro bid

Posted by Nicole Eckersley on 1st June 2011

rice_bowl_lg.jpgEbro Foods has seen its bid to buy Ricegrowers fall through, after the Spanish food maker failed to win over enough of the company’s investors.

The results of a vote of Ricegrowers’ investors showed that Ebro had not secured the backing of both types of the Australian firm’s shareholders for its A$600m takeover offer.

Ebro needed the support of 75% of both Ricegrowers’ Class A and Class B shareholders. However, although 76% of Class B investors accepted the offer, only 67% of the Class A shareholders approved the bid.

Antonio Hernandez Callejas, Ebro’s chairman and CEO, insisted that the deal had always been “complex” and acknowledged the 75% threshold had been “a difficult target to meet”.

However, he said Ebro would continue to look to expand in its two core areas of rice and pasta – and could one day return to a possible deal with Ricegrowers, which trades as SunRice.

“The financial strength of Ebro puts it in an outstanding position to reach similar targets, in rice or in pasta,” Callejas said today (31 May). “We will maintain the excellent relationship we have enjoyed so far with SunRice and perhaps in the future, if it changes its complex corporate structure, we will be able to find new possibilities for collaboration.”

In the run-up to the vote, there was a public disagreement over the valuation of SunRice.

Two weeks ago, after a request from SunRice’s largest shareholder, business valuation firm DMR Corporate published a report that claimed the company had been under-valued.

The DMR report, commissioned by SunRice investor Julian Menegazzo, said a separate report, written by Lonergan, Edwards and Associates, the rice company’s valuer, had under-valued the business.

The LEA report, which was sent to shareholders along with a recommendation from the SunRice board to accept the Ebro bid, had also concluded that the Spanish firm’s offer was “fair and reasonable”.

SunRice chairman Gerry Lawson criticised DMR, calling its research “biased and misleading” and “of concern to the board”.

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