SIX months after ricegrowers blocked a controversial foreign takeover for the iconic SunRice food business, one of the company's biggest shareholders is fearful another offshore bid will be on the cards again soon.
Despite its strong trading performance in the past year and the prospect of another big volume harvest this autumn, SunRice's National Stock Exchange (NSX) B-class share price, at approximately $2, is "ridiculously cheap" and far too tempting to opportunistic bidders according to Victorian-based investor and graingrower Julian Menegazzo.
He believed a share price around $7 or even $10 each would be more realistic in the open market given a big debt reduction push had trimmed the grower-owned processor and trader's debt burden from $300 million to about $187m since July.
SunRice also lifted its after-tax profit by 134pc to $12.2m for six months to October 2011.
After another year of Australia-wide offshore takeovers - including Tully Sugar, the Sunbeam and Angas Park dried fruit businesses and their parent company Manassen Foods - foreign buyers have shown plenty of appetite for well established local food assets.
"SunRice is a powerful business and its running well, but I'm worried it's too attractive to another overseas bid," Mr Menegazzo said.
"Nobody else could set up the sort of $1.5 billion in brands and infrastructure that SunRice has built up, which makes it a likely target, particularly as many shareholders still want to retrieve more value from their shares.
"Most B-class shareholders were already willing to abandon their allegiance to local ownership by selling off-shore in June to get $5 a share."
At $5/share the average B-class shareholder with about 40,000 shares would have netted about $200,000 if Ebro's $610m deal had gone ahead.
A-class grower shareholders were promised $50,000 each for their single shares.
Mr Menegazzo has long advocated that as SunRice was no longer a farmer co-operative its A-class shareholder growers, and former growers and staff with B-class shares, could be best served by an Australian Securities Exchange (ASX) listing to reflect the company's true investment value.
His family company trust owns the maximum possible 5 per cent of B-class shares, as well as being an A-class shareholder and rice sharefarmer at Narrandera, with other cropping interests at Balliang and Werribee in Victoria.
However ricegrowers are generally "pretty cold" on the idea of an ASX float according to Deniliquin district farmer and anti-Ebro campaigner John Bradford, "Parkdale".
"Farmers are worried about giving up grower control of the company, especially given the increased likelihood of a complete takeover once shares are listed on the ASX."
He believed with farm cash reserves hit hard by the drought and rice pool payments cut last season many growers would respond to a high ASX with a sell-off, which would send the share price sliding.
"The company's commendable financial performance last year certainly vindicates our stance against the Ebro sale, but we don't feel an ASX listing is in the industry's long term interests," said Mr Bradford.
Mr Menegazzo conceded relinquishing the dual class share system could leave SunRice open to a potential takeover by a local or overseas company, but he expected a ASX valuation would ensure any bid was far better priced than the "exceptional deal Ebro shareholders would have achieved".
He said SunRice directors had a responsibility to B-class shareholders to ensure they were properly rewarded for their equity investment in the company.
Shareholders would, in return, be keen to ensure the company was running profitably and properly rewarding its grower suppliers.
"Its time for directors to seriously re-examine the situation. They have a duty to look after all SunRice's shareholder owners."
Mr Menegazzo said it was possible that with the arrival of new SunRice chief executive officer, former Viterra and Dairy Farmers boss Rob Gordon, an environment for change may emerge.
But he noted that under Mr Gordon's leadership Dairy Farmers had sold to overseas buyers and Viterra was primarily Canadian-owned.
Mr Gordon replaces former CEO Gary Helou, who moved to the Murray Goulburn co-operative soon after the Ebro bid failed.
SunRice chairman Gerry Lawson is expected to attract plenty of comment about the company's vastly improved debt levels and its performance since the Ebro bid when he addresses Rice Growers Association regional meetings in southern NSW next week.
Mr Lawson has refused to respond to Mr Menegazzo's latest call for an ASX listing and has also been unavailable to comment further on the company's half-yearly results.
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