26 Oct 2010

New meat merger approach by Silver Fern Farms with Alliance

1:23 pm on 26 October 2010

Silver Fern Farms is making a new approach to merge with the Alliance Group.

It has sent an open letter to shareholders of both meat co-operatives, asking for their view on whether a merger should be investigated again.

An earlier attempt to merge with Alliance Group was rebuffed by its board.

Silver Fern Farms chair Eoin Garden says the meat industry needs to consolidate and change its ownership structure if it is to improve farmer returns.

He says the industry environment is different now from when attempts were made to bring the two companies together in 2008.

Mr Garden says that if there is widespread support from shareholders of both co-operatives to evaluate a merger, then it is over to their respective company boards to accept or ignore that view.

Frosty reception

Alliance Group chairman Owen Poole, does not think re-opening discussions would achieve anything.

Mr Poole says Alliance's directors don't support the open letter, which went to its shareholders without its prior knowledge.

And he does not think an informal poll of a competitor's shareholders is an appropriate way of initiating fresh talks.

Mr Poole says the benefits of joining the two meat co-operatives have been investigated on four separate occasions.

Alliance shareholders overwhelmingly rejected Silver Fern's last attempt to initiatwe merger talks two years ago and he does not see any more merit in the latest approach.

Mr Poole also points out the latest merger move has come when an independent review of meat industry strategy is already underway.

But it will be put on the agenda for discussion at Alliance's annual meeting in December.

Silver Fern Farms says farmers have until 8 November to have their say on whether a merger needs to be investigated.