Duxton Farms is looking to add walnuts to its production portfolio which already includes pistachios. Photo: Duxton Farms

THE PROPOSED Duxton Farms merger has hit a road block with a group of shareholders applying to the Australian Government’s Takeovers Panels alleging misconduct by the company’s chair and another investor.

In June, the ASX-listed company announced a proposed merger with separate firms and Duxton Dairies, referred to as Duxton Walnuts, Duxton Bees, Duxton Dried Fruits, and Duxton Orchards.

According to its ASX statement, the group’s assets break down as $27.3M for Duxton Bees, $69.2M for Duxton Dried Fruits, $22.4M for Duxton Orchards and $30.5M for Duxton Walnuts.

Alongside this announcement, the company released information of a $4M placement of new fully paid ordinary shares at an offer price of $1.25 per share, just below the share price for the preceding day of $1.35.

Four days later, Duxton announced an increase of the placement to $4.55M.

Under the placement, Duxton Farms chair Edouard Peter will take up $500,000 worth of shares, while Richard Magides will subscribe for $2.5M.

The company has an extraordinary general meeting planned for October 10, when shareholders will approve the merger and the issuance of the new shares.

Mr Peter and Mr Magides are already significant shareholders in Duxton Farms, currently holding 22.63 percent and 35.95pc voting power respectively.

Trading in Duxton Farms shares was paused on Friday ahead of a release to the market from the Takeovers Panel.

The panel confirmed receipt of an application from a group of shareholders – Grant David Jopling, Edward Fraser Hesket Youds, Explorer Corporation Pty Ltd and Chun Kei Leung.

Mr Jopling, the lead applicant, currently holds a 0.51pc stake in Duxton Farms.

The applicants specified several concerns with the proposed merger and the conduct of Mr Peter and Mr Magides.

This includes that an “undisclosed association exists” between both men which “enabled them to acquire a controlling stake of approximately 58.58pc in [Duxton Farms] without a formal takeover bid”, contravening section 606 of the Corporations Act 2001 (Cth).

They say that this association was “not disclosed in substantial holder notices”.

The applicants also submitted that the merger was “at a significant overvaluation” and this will lead “to a direct transfer of value from minority shareholders to” Mr Peter and Mr Magides.

In the short-term, they have called on the panel to adjourn the EGM until a determination has been made on the application and restraint both men and their associates from voting in parts of the meeting.

The applicants also seek final orders including: a “corrective disclosure of the association, contraventions of s606 and ‘the privileged terms’ of the placement” alongside forcing any shares acquired during this breach to be vested with ASIC for sale and retraining both men from making any further share acquisitions or disposals.

Friday’s release stated a sitting panel had not been appointed, and no decision had been made as to whether to conduct the proceedings.

“The panel makes no comment on the merits of the application,” the release said.

Mr Peter has been chair and executive director of Duxton Farms since 2017.

The release made no direct references to the supposed “association” between Mr Peter and Mr Magides.

It is known that both men are the owners of the 141,000ha Mountain Valley Station which Duxton contracted to lease for a five-year period in late 2022.

Mr Magides is a Singapore-based hedge fund investor listed as the director of Zentree Investment Management.

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