KEY POINTS:
The country's largest meat company, Dunedin-based PPCS, and Southland-based No 3 company Alliance Group are to investigate working together in what must be seen as a precursor to a full merger.
A statement yesterday fell short of using the word merger but said they had engaged accountant PricewaterhouseCoopers "to undertake an appraisal of the two co-operatives' operations to evaluate potential options to improve livestock returns paid to the farmer suppliers of each company".
The announcement has been precipitated by hard times in the industry brought on by the kiwi dollar at record levels since it was floated in 1985.
Asked what had prompted the talks between the two die-hard rivals, PPCS chief executive Keith Cooper said: "It's pretty self-evident when you hear what's going on out in the rural sector. It's the plight of farmers.
"It's the dollar," he said.
A merger would create a company with more than $3 billion in turnover and could be a pre-cursor to a mega-meat company along the lines of Fonterra for dairy farmers.
The respective company chairmen, John Turner and Reese Hart, said the motivation was to ensure suppliers received best value for exports.
"Alliance Group and PPCS see a need for change, extending from suppliers at farm gate through to sale in offshore markets," they said.
"Both boards will have to independently satisfy themselves that any proposals are in the best interests of their respective companies and shareholders before agreeing to proceed with any outcomes."
- NZPA
