Teachers rejects Maple Leaf Foods rights plan
By Pav Jordan and Solarina Ho
TORONTO (Reuters) - Ontario Teachers' Pension Plan, the largest stakeholder of Maple Leaf Foods, said on Wednesday it would oppose the Canadian food processor's adoption of a shareholder rights plan, used by companies to protect against takeovers.
Maple Leaf, whose stock price has been battered in recent years from a series of issues ranging from a food scandal to high commodity prices, implemented the plan on Tuesday after an agreement between its largest shareholders, Teachers and McCain Capital Corp. expired.
"We will vote against the rights plan if it is put to a shareholder vote," Neil Petroff, Teachers executive vice-president for investments, said in a statement.
The Globe and Mail reported earlier this month that Teachers' was looking to sell its stake, which would end a 15-year partnership with the McCain family. The two parties own a controlling stake in Maple Leaf, with the McCain stake currently around 31 percent, sources say.
A shareholder rights plan, also known as a poison pill, is a mechanism that allows existing shareholders in a company to acquire a large number of new shares at a discount, making it more expensive for hostile bidders to acquire the company.
Under the plan, Maple Leaf shareholders would get rights to buy additional shares at a 50 percent discount to the market. They could exercise those rights if any party attempts to acquire 20 percent or more of the shares without extending the offer to all shareholders.
"The question investors are looking at is, does this preclude one group coming in and buying that Teacher's block?" said Bob Gibson, an analyst at Octagon Capital Corp. "It would more likely have to be sold to a number of groups as opposed to one."
Teachers has not commented on the Globe and Mail story, but a source close to the fund says the group is talking to interested parties. Continued...