Speirs sells stake in Rosa Foods for 'modest premium' to $714,000 book value
By Tina Morrison
April 11 (BusinessDesk) - Speirs Group, the fresh food processing business founded by the Speirs family, sold the 40 percent stake in Rosa Foods it has owned for the past decade at a "modest premium" to its $714,000 carrying value, saying there were limited ongoing synergy benefits with its other operations.
Marton-based Speirs bought its stake in Rosa Foods in April 2008 for $500,000 and flagged in its last annual report that it would consider a partial or full divestment of its stake if a proposal provided a better outcome for shareholders. Rosa Foods first started with a cafe in Khandallah, Wellington, and now operates from a factory in Porirua where it produces heat-and-eat meals, frittatas, bakes, salads, pasta sauces, and pies for the country's two dominant supermarket chains.
"The opportunity has been taken with the majority shareholder of Rosa Foods Ltd making an offer to take full control of the company, and there now being limited ongoing synergy benefits between Rosa Foods and Speirs Foods," Speirs said in a statement to the USX market where its shares are traded.
It will receive an upfront cash payment with the balance paid progressively over a three-year period, with the deferred balance subject to interest payments at market rates, it said.
Speirs reported a loss of $205,000 in its last financial year ended June 30, 2017, foregoing dividend payments and reducing directors fees after its salad business was hit by higher costs and weaker revenue as competition forced it to cut prices. In December, the company said it expects to return to "reasonable profitability" this financial year, although the benefits of changes it has implemented will be fully realised next financial year. It said results from the first five months of this financial year show an improving trend and a significant improvement over last year.
Its shares last traded at 7 cents, valuing the company at $793,420.