Schneider Corporation has opened its doors and books to potential buyers after shooting down a hostile takeover bid from Maple Leaf Foods.
Schneider’s board announced Dec. 3 it had adopted a temporary shareholder rights plan – a so-called “poison pill.”
The plan would see new shares issued to shareholders if Maple Leaf or another bidder acquired 10 percent of Schneider shares. The plan is in effect for four months.
“This plan has been put in place as an interim measure for a four month period. It is not intended nor designed to prevent full and fair bids for Schneider Corp. It is intended to provide the board with the time and flexibility it needs to provide a full and fair review of all the available options for increasing value to our shareholders,” said Douglas Dodds, chair and CEO of Schneider Corp.
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Schneider has indicated it is only interested in offers “more financially attractive” than Maple Leaf’s $129 million bid.
Fletcher’s Fine Foods Ltd. and Saskatchewan Wheat Pool are two Canadian companies said to be window-shopping the Kitchener, Ont.-based pork processor.
“I’m not denying it, but I’m very well aware that we have signed confidentiality agreements with a lot of people and we look at a lot of companies all the time, but I just can’t comment on those kinds of things at this stage,” said Fred Knoedler, president and chief executive officer of Fletcher’s.
The chief executive officer of Saskatchewan Wheat Pool said Schneider is one of “many, many, many” companies the pool looks at buying.
“We’re just looking along with many other suitors, I would expect,” said Don Loewen.
Consider options
He said the pool could work on the opportunity with or apart from Fletcher’s.
“If there was a good fit between the companies, then we would look at doing something, a possible acquisition,” Loewen said.
U.S. giants Kraft Foods and Hormel Corp., known for its Spam, are also said to be sniffing around Schneider.
While Schneider’s stable of branded meats might make the company attractive to U.S. processors, Jim Morris said other factors could deter them.
“There isn’t enough livestock within a short distance to permit a so-called American style plant with huge, huge throughput,” said the former general manager of Saskatchewan’s hog agency.
Canadian processors also rely on the export market, which is foreign to many U.S. processors who sell mainly on their home turf.
In early November, Maple Leaf Foods announced it would pay $19 for Schneider shares, which had previously traded around $13. The bid was set to expire at midnight Dec. 5.
On Nov. 24, Schneider’s board of directors told shareholders to reject the offer as “inadequate, unfair and opportunistic.”
Chief executive officer Doug Dodds said in a release the board believes the company will earn more money for shareholders in the future because of recent restructuring and expansion.
The Schneider family said it would not sell its shares at the Maple Leaf price. Together, family members control 75 percent of the voting shares and 17 percent of the non-voting shares in the company.
The company has set up a data room of detailed company information for potential buyers. But Schneider officials did not return calls last week.
When Maple Leaf announced its plans to build a new plant at Brandon, president Michael McCain said the new plant won’t be affected by what happens with the company’s bid for Schneider.
Possible outcome
If Maple Leaf succeeds, the new plant could be a slaughter floor for Schneider’s new cutting floor in Winnipeg, speculated Morris. He said the Brandon announcement could be part of the gamesmanship involved in the takeover.
“Maybe then that suddenly makes Schneiders less attractive, maybe it forestalls if, say, Sask Wheat Pool or someone was going to take a run at Schneiders. Maybe it’s a move in the checker game there.”
