Alliance shareholders also seek merger assessment

Jeff Grant.
Jeff Grant.
Alliance Group shareholders are now seeking the same support as a group of Silver Fern Farms shareholders in a bid to get an analysis of the potential benefits and risks of a merger.

Yesterday, Balfour farmer Jeff Grant, a former chairman of the New Zealand Meat Board and Meat and Wool New Zealand (now Beef and Lamb New Zealand), and rural accountant and farmer Gaye Cowie, from Balclutha, announced they were seeking support from 5% of shareholders to put a resolution to a special meeting for shareholders to debate.

That resolution was the same as the one a group of Silver Fern Farms shareholders, led by Allan Richardson and John Cochrane, announced earlier this month they wanted considered at a special meeting - a full analysis of the potential benefits and risks of a merger, along with a comprehensive risk-mitigation plan verified by an independent firm.

It was logical to seek the same resolution for Alliance Group shareholders, so all farmer suppliers to the two co-operatives understood the implications of the future direction of both companies and the reasons an amalgamation would work or not, Mr Grant said.

When contacted, Mr Richardson said it was ''great'' they had decided to stand up and ask the same questions of their board.

They were questions both co-operatives needed to answer for their shareholders ''so we are all clear on the future direction of our industry'', he said.

Mr Grant said the two main objectives were to encourage Alliance Group's board to state its long-term strategy for the company to shareholders, and to give shareholders the opportunity to express their desire for some independent assessment of the business case towards some amalgamation of the co-operatives.

It was not about telling the boards to merge, but giving the shareholders an opportunity to formally debate the issue, he said.

Ms Cowie said recent reports had again highlighted the ''millions'' of dollars of lost income to farmers every year with the current structures in the industry.

Farmers needed to understand how those lost opportunities might be addressed.

The resolution was not a threat to either board, but encouraged each co-operative to assess, on behalf of its owners, its thinking in a formal way as to its future direction.

''We would like to understand what increased synergy could be made in procurement, processing and marketing between the co-ops that could lead to the benefit of farmer shareholder returns,'' she said.

Mr Grant said the best outcome would be for the two co-operatives to jointly explore those three ''critical'' components and recommend to shareholders a structure that benefited all shareholders and would grow the sheep, beef and venison industry ''rather than a last-man-standing model approach currently taken''.

While it was always going to be a little easier for Silver Fern Farms, with the farmer interest in its capital-raising process and what that might mean in terms of future ownership, he believed the 5% threshold would be reached by Alliance Group shareholders.

Mr Richardson said yesterday his group was very close to reaching the threshold.

When contacted, Alliance Group chairman Murray Taggart said even if support for a meeting was reached, it did not change what the board was able to discuss with shareholders ''because obviously there are sometimes legal reasons why we can't have discussions''.

In terms of the ''bigger picture'', the board had always assured shareholders that if it made commercial sense ''we'll be into it'', and nothing had changed.

The company was paying close attention to changes in the industry, he said.

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