KEY POINTS:
The Craig Norgate-led rural services company PGG Wrightson today won a 50 per cent stake in the nation's biggest meat company, Silver Fern Farms.
Silver Fern said today a total of 75.62 per cent of the votes cast were in favour of the "partnership". The deal required a 75 per cent approval by Silver Fern Farms suppliers.
The vote attracted high polling levels, with more than 83.3 per cent of the eligible votes being cast. Farmers were so finely divided that commentators said the result came down the 120 suppliers who voted at today's Dunedin meeting - and 100 per cent of those who voted supported the deal.
Silver Fern chairman Eoin Garden said he was delighted with the result: "Partnering with Wrightson is in the best interests of Silver Fern Farms' suppliers".
He said the deal was also important to the wider pastoral sector: "It's about the future of the red meat industry".
Under the partnership Wrightson will contribute $220 million to re-capitalise Silver Fern Farms, which some analysts say spent too much on a bitterly contested takeover of North Island meat Richmond.
Much of the Wrightson injection is expected to be spent on clearing debt, in addition to modernising meatworks and technology, but the new hybrid company will have shareholder funds of $510 million and an equity ratio of 80 per cent.
"It's an unprecedented injection of new capital into our industry," said Mr Garden.
In a joint statement, with Wrightson chairman Craig Norgate, he said: "We are excited by the opportunity to create a truly vertically integrated supply chain - from plate to pasture - that better serves the needs of international customers."
The "plate to pasture" theme has been used by the companies to highlight their intended strategy of finding out what customers want, and then produce meat to those specifications, rather than producing meat and then finding buyers.
Wrightson will effectively take over livestock procurement for Silver Fern, and will offer farmers advice of what genetics to use for both animals and pastures to meet the specifications set by overseas buyers.
Farmers are likely to be asked to contract to supply animals of a specific type and weight on a nominated date, rather than shopping around for the highest price available on spot markets.
This will provide Silver Fern's marketing and processing arms with more certainty about the numbers of animals available in a market where the numbers of lambs available are rapidly dropping.
The two chairmen said their shared vision for the industry "extends to a committed drive for further industry consolidation", and they regarded the vote as a clear mandate to pursue this.
The partnership deal will take effect by the end of this month.
- NZPA
