The board of Brisbane Markets Limited has rejected a $148 million takeover bid for the company from fund manager VGI Partners.
In a letter to shareholders, the Board of Brisbane Markets Limited (BML) described the hostile takeover bid by Produce Markets Queensland as a self-interested attempt to control the markets, a move that could be to the Queensland fruit and vegetable industry’s long-term detriment.
The Board unanimously recommended that shareholders with a business or other interests in the markets, and those with a medium to long term investment horizon, should reject the offer but that those with no long term interest should accept it.
Chairman Tony Joseph said: “This advice takes into account the fact that shareholders with interests in the markets enjoy significant advantages given BML’s long and deep understanding of the industry and a shared commitment to the markets’ long-term future and development.”
“It reflects the risks for tenant shareholders if control of the markets was handed to a private equity firm, who is potentially only motivated by a quick financial return," Mr Joseph said.
"There is a risk that in order to generate such a quick financial return, that costs for tenants could be increased or services for tenants could also be reduced.”
Mr Joseph described PMQ’s hostile takeover bid as “one of the most significant issues faced by the industry in a generation”, and said it was critical that each shareholder made an informed decision that considered their individual circumstances.
Since acquiring the Rocklea Markets from the Queensland Government via public tender in 2002, BML has
steadily added value to the business.
Total assets have grown from $86.0 million at 30 June 2003 to $243.7 million at 30 June 2015, and last financial year BML delivered a record $8.41 million net operating profit after-tax and a 12.5-cents-per-share dividend, also a record.
“PMQ is entirely owned by a Sydney-based private equity firm with no genuine links to fresh food wholesaling and no apparent interest in the long-term viability of the Brisbane Produce Markets or the wholesalers, growers and retailers who rely on them for their livelihoods,” Mr Joseph said.
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“Unfortunately, there has been a great deal of misleading and incorrect information put out into the
marketplace by PMQ,” he said.
He said it was critical that information on which shareholders based their decision was credible and
“I urge shareholders to read the Target’s Statement, that was mailed to them today and also available on
BML’s website, to fully understand the implications of the PMQ takeover bid for them and, in the case of
wholesaler shareholders, for their future in the Markets,” he said.
Shareholders are also encouraged to seek independent financial and taxation advice before making a
Mr Joseph also emphasised that the $3.50 per Share offered was conditional on PMQ being able to
implement changes that would fundamentally alter the structure and operations of BML, including
removing the fresh produce industry’s influence on the markets in which it operates.
“Shareholders should remember that our primary objective in buying the Brisbane Markets from the Government just over a decade ago was to ensure we had an appropriate level of control on their
operation, management and development, so we could have say in our own destiny,” he said.