Dawn Meats acquires German distributor Alexander Eyckeler GmbH
Irish meat processor Dawn Meats has acquired Alexander Eyckeler GmbH, a long-standing German customer and partner of Alliance Group, for an undisclosed sum.
The increase will bring Dawn Meats' total proposed cash investment in Alliance Group to approximately $270 million if the proposal is approved by farmer-shareholders at the Special General Meeting set to be held in Invercargill on October 20.
Alliance Group chair Mark Wynne says the additional investment has been triggered by an agreed adjustment mechanism between the two companies, which rewards stronger-than-forecast year-end performance.
“Alliance’s unaudited year-end profit projection of between $18 million and $24 million is above the agreed profit target, and the company’s net debt position is lower than forecast," Wynne says.
“Under this adjustment mechanism, this means an additional $20-$25 million investment from Dawn.
“This is a strong endorsement of Alliance’s performance and the proposed partnership with Dawn. It recognises the hard work of our people in turning the business around and the loyalty of our farmers over the past 12 months.
“The adjustment ensures the final investment reflects Alliance’s improved performance. It’s a tangible vote of confidence in our business and in the proposed partnership with Dawn Meats.”
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Wynne says he encourages farmer-shareholders to vote on the proposed strategic investment partnership with Dawn Meats.
“This is a once-in-a-generation decision for our farmers. Every farmer-shareholder has a voice and a vote.
“It is important farmers take the time to understand the details, talk to their fellow farmers, and make sure they have their say on the future of Alliance.”
He says that as part of the purchase price negotiations in July, Alliance agreed to year-end profit and net debt targets.
“These were designed to give both Alliance farmer-shareholders and Dawn Meats certainty --farmer-shareholders about the $250 million investment amount, and Dawn about the value of its proposed shareholding.
“Both parties recognised the potential volatility of trading conditions in the final quarter of the financial year and agreed an adjustment mechanism to account for over- or under-performance against the targets.”
The additional payment will be distributed as a dividend from the joint venture to the proposed Alliance Investment Co-operative.
This is in addition to the $40 million in loyalty payments already planned, bringing the total dividend distribution to approximately $60 million.
