What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
His call comes as Fonterra's share price dipped below $3/share this month and as shareholders grapple to agree on a new capital structure.
McBride told Rural News that shareholders have been told many times that they don't have to trade shares right now.
"I just hope that they are not thinking that they have to sell because nobody has to sell now," he says.
"Right now, there is no compliance trading: you don't have to sell shares, so you can wait. Often in times of uncertainty, waiting is the best option."
On May 6, Fonterra announced details of its capital structure review. By May 10, its share price has plunged from $4.56 to $3.46/share.
On June 18, the share price dropped to $2.80. By the middle of last week it had regained some lost ground and was hovering around $3.11.
McBride points out that some farmers are still confused about compliance.
"Some folks haven't got the message that they aren't forced to do anything. They are not forced to either buy or sell shares so they can wait and see how this plays out. It's around personal choice at the moment."
McBride says while he's not in a position to offer financial advice to farmers, he wants them to stop looking at the share price every day.
"We don't look at the share price every day, just like we don't at our farm price every day or our cow prices every day," he adds.
"This is all about the medium to long term milk price which drives the real value of our going concern business."
Fonterra's current capital structure, introduced 2012, is up for review. The board has put a set of options in front of farmers including its preferred option - reduced share standard with either no fund or a capped fund.
However, McBride is now signalling that the board is willing to listen to feedback and make changes to its preferred option.
"We are listening to farmers and we will make changes to the proposal," he says.
To give farmers an opportunity to present their views directly to him, McBride has been meeting farmers throughout the country this month.
"I need to hear, are there any other ideas out there... we have a shared problem we need a shared solution."
