Silver Fern pitches poll on merger to investors

Silver Fern Farms' Eoin Garden wants shareholders' views on the merger. Photo / Simon Baker

Meat company Silver Fern Farms is appealing to shareholders in a bid to get a merger with rival co-operative Alliance Group back on the table.

Silver Fern directors published an open letter in newspapers at the weekend to shareholders of both companies seeking their views on a joint investigation of the merits of a merger.

Alliance chairman Owen Poole said the letter was published without his firm's knowledge and it did not have the board's support.

Poole said Silver Fern Farms had recently approached Alliance about a possible merger but the overture was rebuffed because it would not lead to wider industry aggregation.

The country's other main meat companies, Affco and Anzco, had ruled out merging, he said.

Silver Fern chairman Eoin Garden said the advertisement and accompanying poll gave the shareholders of both companies a say in the future direction of their companies and filled a leadership vacuum.

"There has been so much debate that once and for all this is an opportunity for the actual owners of the companies to have their say without all the muddying that occurs at public meetings, interpretation and media discussion."

Whether this led to merger discussions and negotiations, he said, depended on the results of a poll, which would be independently collated, accompanying the advertisement.

In the advertisement, Silver Fern asks shareholders if they want an independent facilitator appointed to chair a joint evaluation committee.

That committee would create a strategic plan for the future of meat and meat byproducts with an agreed governance structure, and oversee an independent financial analysis of an amalgamation of the two companies with the report available to shareholders.

But Poole said his board had evaluated a merger three times and commissioned an independent assessment.

Each time it had been rejected.

Poole said Alliance shareholders two years ago overwhelmingly rejected a merger proposal promoted by the farmer lobby group the Meat Industry Action Group.

"Recently we had discussions with Silver Fern and their merger proposal falls well short of commercial and financial hurdles," he said.

Wider industry aggregation was needed and merging the co-operatives would not achieve that but instead leave them responsible for industry rationalisation, Poole said.

"A merger of the co-operatives would not be of sufficient size to change the behaviour on-shore or in-market in order to create advantage and enduring value."

Garden said the industry environment was quite different now from when attempts were made to bring the two companies together in 2007-08.

"We have tried to re-engage Alliance, but they keep defaulting to the analysis of three to four years ago as opposed to re-evaluating the situation in the current supply, economic and global environment."

Garden said if there was overwhelming support from the estimated 12,000 shareholders to evaluating a merger, then it was incumbent on the boards to listen.

- OTAGO DAILY TIMES