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Shareholders Advised To Accept United Milk Offer

Kapiti Board Recommends Shareholders Accept United Milk Offer

The Board of Kapiti Cheeses Ltd announced today that it had reached substantive agreement on the terms of an offer by United Milk Ltd (UML) for the Company. The Kapiti Board is recommending acceptance by shareholders of an offer by UML to purchase 100% of the shares at a total value of $15m (equating to a price of approximately $5.67 per share). Alternatively, if for whatever reason, a purchase of the shares is impractical, UML has agreed, subject to final detailed negotiation, to acquire all of the assets of the Company for the same price.

Kapiti chairman, John Butterfield, said that the Board is recommending this offer on the grounds that it is the best offer to have emerged from the recent tender process and it compares favourably with the valuation analysis undertaken by Cameron & Co., advisors to the Board. The price offered is substantially higher than the price of $3.75 stated to have been paid recently by New Zealand Dairy Foods Holdings Ltd (NZDF) for its 10.3% stake. NZDF was invited to participate in the tender process but declined.

Mr Butterfield said that the UML offer was a very positive outcome for shareholders and confirmed the Board’s confidence in the value and rigour of the formal process. UML’s Chief Executive Officer, Greig Shearer said that he views the possible purchase of Kapiti cheeses and ice creams as complementary to its current business of fresh milks and cream; it is consistent with the company’s objective as a producer and alternative supplier of dairy products, supported by a well-positioned brand such as ‘Kapiti’.

To preserve the integrity of the process through to its conclusion and to ensure it is fair, orderly and open, Kapiti gave notice earlier in the month of a Special General Meeting to be held on Friday 22 August. At the meeting shareholders will be asked to vote on a prosed constitutional amendment that would reduce the threshold at which a potential buyer can acquire all of the shares from 90% to 75%. This is designed to ensure that shareholders have the best and an equal opportunity to realise the benefits of the offer. The Special General Meeting will give all shareholders the opportunity to debate the proposed constitutional amendment and, if they see fit, to pass it.

Last week NZDF made an application to the Court for an order which would effectively require the Board to cancel this meeting and prevent shareholders from voting on the proposed constitutional amendment. Mr Butterfield said that the directors are confident of the strength of their legal position and that the Board intends to defend the legal action in the interests of all of Kapiti Cheeses’ shareholders.

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