Susan Gordon, Business Reporter

Left: Businessman and principal owner of Three Bears, Donovan Lewis. Right: Christopher Berry, chairman of Mayberry Investments Limited. - File

Mayberry Investments Limited has increased its takeover offer for Salada Foods Limited to $40.08, saying yesterday that it upped the price Monday ahead of the coffee company board's recommendation that shareholders reject its original bid.

Mayberry, chaired by Chris Berry, had put a $172 million, or $32.50/share offer on the table for 51 per cent of Salada in August, rivalling the mandatory bid of $25.82 made by controlling shareholder, Donovan Lewis' Three Bears.

Salada a week ago also threw out the Lewis offer, saying it undervalued the holdings.

The new price values the Mayberry bid at $212 million.

The rivalry has sent the stock soaring to $65, a gain of $5.49 over Wednesday's price of $59.51, which itself reflected a near $8 increase on that day.

The stock had been trading at or around $45 before the rivalry, reflecting a 44 per cent premium at the close of trading Thursday. At $65 the coffee company has a stock market value of $675 million.

Investment manager Mark Croskery, chief executive officer of Stocks and Securities Limited, said he expected the stock price to be maintained, and even climb further to between $70 and $80.

Shareholders should not accept the new Mayberry offer nor the Lewis bid, Croskery said, based on Salada's book value per share which he projects will reach $44-$48 within a year.

The Salada board met in an emergency meeting on the new offer Wednesday, but it was not immediately clear whether its own position had changed.

"The company will publish its further recommendation or response in the press and will send to its stockholders a copy of such recommendation or response to the Mayberry offer," it said in a statement.

The offer by Mayberry - which owns a negligible 31,250 Salada stock units or 0.3 per cent of the company - closes September 28.

Three Bears owns 60.23 per cent of Salada and is following through on stock exchange rules with the mandatory offer for the other 39.77 per cent.

To secure its targeted 51 per cent bid, Mayberry would have to woo Lewis to sell some of its holdings.

Lewis, speaking with the Financial Gleaner Thursday, said again he would not sell, neither would he improve his offer.

He all but called the Mayberry offer a futile exercise.

"I don't know what they are trying to do; that doesn't make sense," he said. "I have over 60 per cent of the shares and I'm not selling. Is he really serious?"

The investment company, however, remained undaunted.

Chief Executive Officer, Gary Peart, told the Financial Gleaner that Mayberry saw value in the stock and that responses to the offer had been fair so far.

He said the increase in the offer price was as a result of Mayberry's re-evaluation of the stock and this was sent to the directors on Monday, prior to their circular.

"We see it as a good acquisition and an acquisition which would meet our criteria ," said Peart, but declined comment on the company's expectations of success.

Lewis said that even at the new price, Mayberry's rival offer could not succeed. He said no one at the company had approached him to sell.

Salada's rejection of the first Mayberry offer was on the basis that the J$32.50 offer price was still unfavourable compared with the $44.50 at which the stock traded as at August 31.

The offer at a discount of 28 per cent below the last trade price, said the circular, was a significant deterrent.

It valued Salada at $337.6 million ($32.50 times 10,388,330 stock units in issue) but the directors feel that the break up value of the company exceeds the offer price.

The market value of lands and buildings were placed at a minimum of $120 million, plant and equipment at $151 million, and the Company is said to be holding approximately $130 million in cash against a long term loan with a balance of $13.8 million at a 12 per cent interest per annum.

The board of directors also pointed out that they were not aware of any arrangement, agreement or commitment made or proposed to be made between Mayberry Investments and any directors or officers of Salada.

It also noted that except for Advantage General Insurance of which Mr. Lewis is a director no other person beneficially owns equity shares in Salada above 10 per cent.

Lewis said the new $40.08 was "not worth the time or the effort."

However, Peart who said Salada is an illiquid stock and that the price could jump significantly either way and argued that a lot of shareholders who had already taken up the offer said they had been trying to sell their shares for years but could not find buyers.

As for take up of the Mayberry offer to date, said Peart: "It has been fair to date. We haven't got the total yet. With the increase, people are in a wait and see mode."

susan.gordon@gleanerjm.com