New Zealand farmers told Dawn Meats proposal is their 'best option'
The board of the Alliance Group, New Zealand's 100% farmer-owned red meat co-op, has told shareholders that a $250 million proposal by Dawn Meats represents their "best option".
The Dawn Meats proposal currently on the table would see the Waterford based group, which has been in business since 1980, invest $250 million in return for a 65% stake in the Alliance Group if approved.
Last month Dawn Meats confirmed it had been selected by the board of Alliance Group as its "preferred long-term strategic partner".
According to Niall Browne, chief executive, Dawn Meats, the Irish company is already the largest retail packer of New Zealand lamb in the UK and has "worked closely with Alliance for many years".
"The opportunity here is to create a dynamic industry competitor with a unique combination of customer relationships, resources, skills, routes to market and industry knowledge that will give us a powerful competitive edge, both locally and globally," Browne outlined.
He also said: "Dawn Meats has a successful operating and investment track record in Ireland, the UK and in the EU.
"Having the ability to grow in partnership with some of New Zealand’s leading farmers and create a year-round supply for our customers between the northern and southern hemispheres is an opportunity we are deeply committed to and take very seriously".
Alliance Group chair, Mark Wynne, had also made no secret of the fact that "Dawn Meats’ balance sheet power, strength in beef and market access across the UK and Europe" was an attractive proposition for the New Zealand co-op.
Earlier this week Alliance Group farmer-shareholders received detailed information on the proposed $250 million Dawn Meats proposal ahead of a vote and special general meeting next month on October 20.
Shareholders each got a scheme booklet which set out detailed information including financial, operational and governance arrangements in relation to the proposed Dawn Meats offer.
An independent adviser’s report on the Irish group's proposal has also been published by corporate advisor Northington Partners.
This report stated that in relation to the Dawn Meats proposal:
- The Alliance Board’s strategic review process was comprehensive;
- The Dawn Meats offer is clearly the best option presented and the only one that meets the strategic and financial requirements;
- Alliance equity is valued between $0.35 to $0.87 per share (midpoint $0.61) versus Dawn’s offer, which values Alliance at $1.05 to $1.31 per share (midpoint $1.18) – a 93% premium, representing compelling value for shareholders;
- The proposed ongoing governance arrangements are reasonable;
- The partnership with Dawn will offer significant strategic benefits to shareholders;
- If shareholders vote ‘no’, Alliance has a very limited and unlikely set of alternatives. It can pursue asset sales, site closures and large cost reductions, it can attempt to raise capital from shareholders or other investors, or it can go into insolvency.
According to the Alliance Group chair the proposed capital investment by Dawn Meats would safeguard the interests of its farmers, provides certainty and unlock "future value".
“Combined with the detail of the proposal as outlined in the scheme booklet, the independent report reinforces the Alliance Board’s strong belief that accepting this proposal is, without doubt, the best available option for shareholders to take.
“That’s why the board has unanimously recommended that shareholders vote to accept the proposed offer," Wynne added.
