Buttery prize
OPINION: Westland Milk may have won the contract to supply butter to Costco NZ but Open Country Dairy is having the last laugh when it comes to cashing in on NZ grass-fed butter.
Westland’s board signed a conditional scheme implementation agreement to sell the West Coast cooperative to Hongkong Jingang Trade Holding Co, a wholly owned subsidiary of Inner Mongolia Yili Industrial Group for $3.41 per share.
Westland chairman Pete Morrison says the board believes that the proposed transaction represents the best available outcome for shareholders; it has the unanimous support of the board.
“The acquisition price represents an attractive price to the Westland shares’ nominal value.
“Westland will seek shareholder approval for the proposed transaction at a special shareholder meeting which is expected to be held in early July 2019.”
Yili has guaranteed to collect milk and pay a competitive payout of a minimum of the Fonterra farm gate milk price for 10 seasons from the season commencing 1 August 2019.
Yilli is the largest dairy producer in China and Asia and has a strategy to grow both its domestic and global businesses. Yili acquired Oceania Dairy Limited in South Canterbury in 2013 and has invested $650m into the plant.
Westland’s sale follows a strategic review conducted by the board. At the conclusion of the review, the Board initiated Project Horizon – a process to explore future capital and ownership options to provide a long-term solution for shareholder farmers following Westland’s inability to deliver a competitive milk payout in recent years.
Morrison says the board confidentially engaged with over 25 parties in a competitive process to seek indications of interest in a cornerstone investment in Westland or a full acquisition or merger with Westland.
“We have advised shareholders of the proposed transaction and our recommendation,” says Morrison.
“A detailed shareholder booklet containing information relating to the proposed transaction, the Independent Adviser’s report, the reasons for the director’s unanimous recommendation and shareholder meeting information is currently expected to be provided to our shareholders in mid June 2019. We will also hold farmer consultation meetings to discuss the proposed transaction and information provided to date.
“We will also brief staff, customers and key stakeholders on the deal,” Morrison said.
The proposed transaction will be by way of a scheme of arrangement and requires the approval of 75% or more of the votes of shareholders (in each interest class) who vote; and more than 50% of the votes of all shareholders entitled to vote (whether or not actually voted).
The proposed transaction also requires High Court approval of the transaction in accordance with section 236 of the New Zealand Companies Act, consent under the Overseas Investment Act, and completion of other customary conditions.
Westland Milk
- Founded in 1937
- NZ’s second-largest dairy co-op
- One of West Coast’s largest employer
- Contributes 14.35% of the region’s GDP
- Makes butter, dairy powders and specialist nutrition products.
