Alliance Group chairman Owen Poole was pulling few punches in an interview yesterday as he accused PPCS of breaching goodwill and confidentiality agreements by releasing to the media and shareholders details of merger negotiations as justification for the reasons it declined
to sign a co-operation agreement.
The meat mega merger concept was dead, said Mr Poole, because other parties in the talks had lost faith and confidence due to PPCS making public details of the negotiations in a letter to shareholders and released to the media on Tuesday.
"No-one will want to engage with them at this point. The goodwill and trust has been destroyed.''
Mr Poole said various ideas where companies could work together were raised during the merger negotiations, and the Alliance board would discuss whether to pursue those in the coming weeks, but PPCS was unlikely to be included.
"There certainly is an appetite among the other companies to look at what can be done,'' Mr Poole said in a statement.
The key was whether gains for farmers and the industry were adequate.
He was lukewarm to an offer by PPCS to work with Alliance on areas such as toll processing of livestock, joint-venture off-shore marketing, integrating livestock transport and buying and selling arrangements of products.
He said greater gains and benefits would have been possible from advancing plans to create a meat mega company to process and export 80% of sheepmeat, some beef and venison.
In its letter, PPCS said it declined to sign a co-operation agreement based on professional advice and concerns about the process and fears the $400 million in gains expected were being eroded by companies excluding beef processing.
Mr Poole said PPCS knew before setting its preconditions for advancing the concept that not all beef would be included in a merged entity.
PPCS said it had no input into the merger process, saying it was imposed by Alliance.
But Mr Poole said the process was designed by Alliance in conjunction with two international accounting firms and legal advisers and took account of companies' need for certainty and a quick resolution.
"It is an appropriate process when trying to bring five companies into the box,'' he said.
The next phase of the merger would have been determining company valuations alongside the formation of strategic and business plans, so a balance sheet could be established and the need for debt funding and farmer capital known.
"If the outcome was positive, it would go to the Commerce Commission. "If not, any of the five companies could have stepped out.''
PPCS has questioned whether the $400 million in gains could be substantiated, but Mr Poole stood by his calculations that market benefits from a merger of $10 a lamb were achievable, saying another company had done similar work and come up with results within 5% of the calculated benefits.
