Dawn Meats will increase its investment in a New Zealand-based meat company from NZ$250 million to around NZ$270 million, Agriland understands.

Dawn Meats announced in August that it has been selected by the board of Alliance Group as the preferred long-term strategic partner of the New Zealand-based meat producer Alliance Group.

The proposed partnership would see Dawn Meats acquire 65% of the shares in Alliance Group.

The deal is subject to a vote among Alliance Group's farmer shareholders (the business is organised as a co-operative). This vote is expected to take place on Monday (October 20).

When Dawn first announced the proposed partnership, the investment amount was noted as $250 million.

Agriland understands that this will now be increased by an additional sum of between $20 million to $25 million, effectively bringing Dawn's total cash investment to around $270 million.

The increase is understood to be in line with an adjustment mechanism agreed between the two parties, where the investment amount could be adjusted depending on the strength of Alliance Group's financial performance.

The share that Dawn Meats will acquire for the increased investment- if the deal is ratified by the New Zealand company's farmer shareholders - will remain at 65%.

If the deal goes ahead, the additional money (over the original $250 million) will be distributed through a divided from the joint venture to the new Alliance Investment Co-operative.

The results of the Alliance Group shareholder vote are expected to be announced on Monday night (New Zealand time).

Alliance Group deal

In addition to shareholder acceptance, the transaction is also subject to New Zealand High Court and regulatory approvals.

If approved, proceeds from the proposed transaction would be used to reduce Alliance Group’s short-term working capital facility by $200 million; accelerate the board’s strategic capital expenditure programme; and enable the distribution of up to $40 million to the Alliance cooperative, subject to shareholder livestock supply.

If shareholders do not support the proposed investment, the Alliance board has said it would be obligated to enter into a process led by its banking syndicate, which may involve possible asset sales, further site closures and further cost-reduction initiatives.