Silver Fern Farms is proposing to sell its Napier hide processing plant to Lowe Corporation, as part of a toll processing arrangement for North Island hides.
In a statement yesterday, Silver Fern Farms chief executive Keith Cooper said the two companies had entered into a conditional agreement, with staff consulted yesterday.
Lowe Corporation, which was undertaking due diligence, proposed to purchase the leathers business and run it as a going concern, with the transferral of all 76 staff on their existing terms and conditions.
As part of the proposed purchase agreement, Silver Fern Farms would toll process the majority of its North Island hide business through Lowe Corporation facilities, Mr Cooper said.
Without going into specifics, Mr Cooper said it was a ''multimillion-dollar deal'' which would also have long-term benefits to the co-operative and Lowe Corporation.
Over the past few months, Silver Fern Farms had undertaken a strategic review of the North Island pelt and hides processing areas of its business with a view of optimising returns, reducing costs and lifting its focus on its core business, which was producing red meat.
The proposal from Lowe Corporation was ''highly collaborative'' and brought about efficiencies of scale and a pooling of expertise for the greater benefit of both businesses.
Longer term, the agreement had potential to avoid duplication of future capital investment across the industry.
''Our sector is asking for this kind of collaboration and we have been investigating various options where we can play a part in bringing greater returns to the sector,'' Mr Cooper said.
In 2013, the two companies established a toll processing agreement for North Island pelts which had already brought about benefits for both companies, Lowe Corporation managing director Andy Lowe said.
Staff have entered into a consultation period.
Due diligence was expected to be concluded by next Friday and the results of that and the consultation process would then be assessed, with a final decision announced on March 25.
