Dawn Meats to pay €128m for 65pc stake in New Zealand-based Alliance Group
Farmer-shareholders in Alliance Group were informed of their board's preferred and unanimously recommended option yesterday.
Proceeds from the proposed transaction would be used to reduce Alliance Group's short-term working capital facility by NZ$200m, accelerate the board's strategic capital expenditure programme and enable the distribution of up to NZ$40m to the Alliance co-operative, subject to shareholder livestock supply.
Mark Wynne, the chair of Alliance Group, said the business had explored several options as part of its recapitalisation process, and the Dawn Meats agreement reflected a 'very compelling offer'.
He warned farmer members of the group that if they don't accept the deal, Alliance Group could face further asset sales, site closures and cost-reduction initiatives.
Dawn Meats chief executive Niall Browne said the Irish firm 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,' he added.
Mr Browne noted that Dawn Meats has worked with Alliance Group for a number of years, with the Irish group being the largest retail packer of New Zealand lamb in the UK.
In addition to shareholder acceptances, the deal between Dawn Meats and Alliance Group is also subject to New Zealand High Court and regulatory approvals.
Mr Wynne said the announcement comes after a two-year process to reset and recapitalise Alliance. 'The process we have undertaken on behalf of our farmer-shareholders to meet our banks' requirements means we are now a much fitter and stronger business.
'With Dawn Meats' balance sheet power, strength in beef and market access across the UK and Europe, and Alliance's strength in lamb and market access across Asia, China and North America, there are significant commercial and operational synergies at stake – with potential for our shareholders to see the value of their residual 35pc stake grow over the long term,' he added.
The proposed transaction is to be implemented via a scheme of arrangement and will need a minimum of 75pc shareholder acceptance of those who vote, and greater than 50pc of all shareholdings being voted in favour at a special general meeting in mid-October.
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