CALGARY – United Grain Growers spent more than $2 million this year to fend off a takeover bid by Alberta and Manitoba pools, shareholders were told last week.
It was the major item in trimming cash flow per share to $2.66 from $2.89.
“Takeovers are not cheap exercises to go through,” Brian Hayward, chief executive officer of UGG, told the annual shareholder’s meeting Nov. 5. “In our case, the cost of responding to the hostile bid was $2.1 million. The bulk of this amount was for legal and investment banking advice.”
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Considering it was the first general meeting of company delegates since the dramatic corporate struggle last summer, there was surprisingly little mention of it during the two days.
President Ted Allen alluded to the fight when he talked about an “eventful” past year which was “difficult but satisfying.”
And it resulted in a deal with the American corporate giant Archer Daniels Midland Co. which was “unusual but very logical,” Allen said.
Hayward said he considers the corporate struggles of the previous year as a sign of evolving times as the pools tried to take UGG “back to being a pure co-operative.”
He suggested it was a survival tactic by Manitoba Pool Elevators and Alberta Wheat Pool.
“The failed takeover is a sign of an industry in significant transition,” he said. “The players are charting new strategies in changing times. Some may see their very survival at issue while others are looking for the opportunity that change creates.”
Stock option plan approved
While shareholder representatives did not demand a public post-mortem from the company leaders on the takeover battle, they did approve a management proposal to offer another 750,000 shares to executives through the executive stock option plan.
When one delegate questioned the move later, UGG Alberta vice-president Bryan Perkins said stock options are part of the typical executive compensation package in the corporate world.
It allows company executives to buy stocks at the market price on the day of purchase.
“They only make money if the price of those shares rises in the market so it is in their interests to manage the company well,” he said.
