In a copy of the letter to Alliance shareholders acquired by the Otago Daily Times, Silver Fern Farms (SFF) chairman Eoin Garden said his board had written to their directors to "formally request they re-enter meaningful discussions in good faith to merge Alliance Group and SFF."
That merger process could start as soon as SFF shareholders approved a partnership with PGG Wrightson, which would inject $220 million to create what has been called a fully-integrated pasture-to-plate meat company.
"If the partnership with PGG Wrightson (PGGW) is approved, we want to immediately commence the process of proving the concept of a merger with Alliance Group, compiling the business case, seeking statutory approval and completing a valuation exercise," SFF chairman Eoin Garden said.
Alliance Group chairman Owen Poole declined to comment on SFF's move, saying the board would respond by letter to its shareholders and at shareholder meetings, which start in Milton on Monday.
Recently he said talk of a merger between the two co-operatives was not an option because there was no proposal to discuss.
SFF acknowledged it was "unconventional" to write to opposition shareholders, but a percentage of its 14,000 shareholders and Alliance's 5000 had shares in both co-operatives.
Mr Garden said the topic of industry consolidation and SFF's plate-to-pasture integrated supply chain strategy was too important and had to be communicated directly to farmers.
Two previous merger attempts have failed, the first last year when Alliance withdrew, citing SFF's debt and excess processing capacity, and earlier this year when SFF declined to sign a co-operation agreement to advance the meat mega-merger because it said the concept had changed.
In the letter, Mr Garden said SFF supported a single co-operative, and since the initial failed attempt SFF had reduced debt by $150 million and closed six businesses.
"These have been achieved prior to the proposed $220 million capital injection into our company."
A sticking point for farmers has been a fear of PGGW having too great an influence in SFF, the loss of farmer control and its co-operative status.
Mr Garden said PGGW had always accepted it would dilute its shareholding should Alliance or another company want to join the new entity.
It proposes an eight-person board, four from SFF including the chairman and four from PGGW, with six directors needed to support a resolution.
Further details would be sent to shareholders later this month.
Mr Garden said the first hurdle was to get SFF shareholder support.
If that was not achieved, further industry consolidation would be "deferred or stalled."
"We see it as a great opportunity to make real progress in not only adopting a strategy, but also progressing consolidation in an organised and structured manner."
Mr Garden asked Alliance shareholders to make their views known to their directors, saying concerns could be addressed within commercial negotiations.
SFF chief executive Keith Cooper said in an interview that this was an issue affecting all sheep and beef farmers.
"It's an industry issue, it is not just about companies."
SFF's move has the support of the Meat Industry Action Group ginger group, with spokesman John Gregan saying that if the two companies merged, the group's job would have been done.
"If we are overtaken by these two companies putting something together themselves, we'd be more than happy to take a back seat."
Alliance directors owed it to their shareholders to view what was on offer, he said.
The group has called special general meetings of the two co-operatives to try to initiate merger talks and Mr Gregan would be happy if those meetings were unnecessary.
