Do you believe this will be the likely or best option for Bright in the current circumstances if their intention is to actually takeover Synlait?
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Can Bright even make a takeover over for Synlait? They would need OIO approval and A2 agreement in the case of a straight takeover offer to get to 90% of the available shares
They would still need the OIO for a scheme of agreement attempt, 75%…?
Agreed, it's not as easy as Bright deciding to buy- and there's the bonds to think about. With 560M of debt, and a dispute with A2M as 50% of the revenue, it'd be a big ask to pay more than that to take it over. More likely is a massively diluted cap raise (but then there's the dispute to think of with A2M). Other possibility is the only saleable asset is Duansandel and A2M the only real buyer with the cash to pay for it.
The more likely case than a takeover would be Bright buying the North Island assets.
Why not just sell the North Island assets to Open Country who are expanding their supplier network each year and with a higher payout than Fonterra should be able to fill the factory quickly .They seem to run a very tight ship ,if anyone can may a go of it Open Country would be my bet. Sylait is then left with the South Island a capital raise and problem solved
I assume like all selling processes, they will offer it to everyone and take the highest price. Seems like a waste of time that they are spending a few months on a strategic asset review to come to the conclusion they need to sell their assets as if it was a surprise to them, and will likely be spending another 6 months in a tendering process, likely needing another extension from the banks, but just in the nick of time to have money to repay their bonds (only if the sale is successful). They are working on such a short timeline and likely have to sell at fire sale prices.
OCD have never come close to matching Fonterras payout. They do pay quarterly and it can be hard to compare but its often miles behind on an annual basis. How they achieved market share was a combination of regulations around monopolies and Fonterra farmers cashing in their shares which were worth much more 15 years ago. Long story big picture.
Westland Dairy as a reference point for how the Chinese operate:
Most of us can remember wondering (and then, laughing) at the Chinese company Yili paying $3.41 per share (vs independent valuation of $0.88 to $1.38) for the loss making Westland and taking over Westland's heavy debt burden of $342m.
Well, turned out Yili knew exactly what they were doing - turnover has increased by 52% to $1.065b from the $698m in 2019 when Yili took over the company. More importantly, Yili has turned Westland losses to profits - $38.9m in 2022 and $55.9m in 2023.
So a Chinese company with unequalled access to overseas markets (especially China) and deep pockets bought a NZ dairy company which was in financial distress and under its management and ownership, turned it into a highly profitable growth dairy company.
Sounds familiar?