Merger vote in hands of South Islanders

Eion Garden
Eion Garden
The weight of numbers means South Island rebate suppliers in Silver Fern Farms will decide whether the meat co-operative will merge with PGG Wrightson.

Despite a significant presence, there were fewer rebate suppliers in the North Island who could vote to accept or reject the proposal, but SFF chairman Eoin Garden said explanatory meetings would be held in the North Island in the next few weeks.

More than 300 SFF shareholders have attended meetings in Canterbury and Southland in the past two days, which Mr Garden said were generally positive, with people hungry for information about the proposal by PGG Wrightson to buy half of SFF for $220 million.

Mr Garden acknowledged voting would favour South Islanders but said SFF and PGG Wrightson wanted to sell the concept to all suppliers, not just holders of rebate shares.

"Going forward, we have got to have the confidence and respect from suppliers that they want to continue supplying SFF."

The situation arose when SFF, then PPCS, bought Richmond, with many North Island suppliers opting for a new class of share, known as supplier shares, which did not have voting rights on constitutional issues.

Former SFF director Alistair Polson, from Wanganui, estimated there were fewer than five million voting shares in the North Island compared with 45 million in the South Island.

"It is a South Island issue, which is a problem for the company because half its business is in the North Island with beef."

Support for the venture among North Islanders was mixed, with some concerned at PGG Wrightson's involvement and loss of farmer control, while others welcomed the capital injection and opportunities a corporate would bring, viewing it as a catalyst for further change.

Mr Garden said it was not intentional that North Island shares had limited voting rights, rather it was the suppliers' choice and the limitation of the shares was pointed out at the time.

SFF chief executive Keith Cooper said in an interview that concern expressed by some farmers about the deal adding extra procurement costs was unfounded.

SFF's 100 field staff would be amalgamated with PGG Wrightson's 180 field staff, who would procure prime stock for SFF for a commission.

"We set pricing, we set the models and they just do the implementation," he said.

Which company received stock drafted by PGG Wrightson staff would be up to the owners of the animals.

There have been further claims the move was a desperate bid by SFF to try to arrest its falling market share, which Mr Cooper rejected.

He met field staff this week and told them SFF had increased its market share.

The industry needed to look at the proposal differently, he said.

"This is not just about consolidation, but a change in the way we do business."

Farmers wanted change in the industry and the deal answered that call, he said.

 

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