6 Nov 2008

$220m meat merger deal called off

3:22 pm on 6 November 2008

A $220 million deal that was supposed to help revitalise New Zealand's struggling meat industry has been called off.

The Silver Fern Farms meat cooperative has put an end to the proposed partnership deal with rural servicing company PGG Wrightson.

The company pulled the plug on the deal on Monday, after giving PGG Wrightson an extra month to raise the funding it needed to secure a stake of 50%.

The upheaval in financial markets meant PGG Wrightson has been unable to get the funding needed to pay the first instalment of the $220 million price.

In October, PGG Wrightson chairman Craig Norgate revealed that the global credit crunch was making banks nervous about the finance he needed, but he was still hopeful the deal would go through.

Silver Fern Farm's chief executive Keith Cooper says since then, sharemarket volatility has made it impossible for Mr Norgate to raise the equity the banks wanted and nothing is likely to change in the near future.

Silver Fern says that has left the company with no choice but to end the agreement.

Mr Cooper says the company will look at compensation from PGG Wrightson over defaulting on the payment, but says the amount or form of that will depend on whether they can work out an alternative deal.

PGG Wrightson says it will continue to look at ways to work with Silver Fern Farms.

As part of the partnership, PGGW was to take over the livestock procurement for Silver Fern Farms. Mr Cooper says that arrangement is on hold as well.

Mr Norgate is currently overseas and not available to comment on the latest development.