Every vote will count - Alliance chair

The report by corporate advisor Northington Partners, in accordance with the Takeovers Code, notes that Alliance board’s strategic review process was comprehensive.

It states that the Dawn Meats’ offer is clearly the best option presented and the only one that meets the strategic and financial requirements.

The report values Alliance equity between $0.35 to $0.87/share (midpoint $0.61) versus Dawn’s offer, which values Alliance at $1.05 to $1.31/share (midpoint $1.18) - a 93%premium, representing compelling value for shareholders

It says the proposed ongoing governance arrangements are reasonable and the partnership with Dawn will offer significant strategic benefits to shareholders.

The report also cautions that if shareholders vote 'no', Alliance has a very limited and unlikely set of alternatives.

“It can pursue asset sales, site closures and large cost reductions, it can attempt to raise capital from shareholders or other investors, or it can go into insolvency.”

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The Northington Partners report and the Scheme Booklet that contains detailed information including financial, operational and governance arrangements in relation to the proposed joint venture with Dawn Meats, one of Europe's leading red meat processors, were sent to shareholders this week.

Alliance Group chair Mark Wynne is encouraging farmers to read the Scheme Booklet and Northington Partners report to help them make an informed decision on the proposal.

“The release of this information to our shareholders, including the independent assessment prepared by Northington Partners, follows a robust two-year process to reset and recapitalise the business and explore all available options, with the Dawn Meats proposal clearly the best option presented,” he says.

“Alliance has implemented significant positive change over the last two years, in line with its revised strategy. It is now a leaner, fitter and stronger business and will return to profitability this year. However, the company must now recapitalise its balance sheet at this critical juncture.

“This essential capital investment by Dawn Meats will strengthen our financial position, enhance our operational capabilities and enable us to create and extract more value in market.

“Not only will it give us the capital we need to thrive alongside a complementary partner with shared values and shared operational excellence, but as outlined in the independent adviser’s report, it also comes at a very attractive premium.”

The independent report reinforces the Alliance Board’s strong belief that accepting this proposal is, without doubt, the best available option for shareholders to take, says Wynne.

He says that’s why the board has unanimously recommended that shareholders vote to accept the proposed offer.

The proposed transaction would see Dawn Meats Group invest $250 million to acquire 65% of the shares in Alliance Group, subject to shareholder and Overseas Investment Office approval.

The proceeds would be used to reduce Alliance’s short-term working capital facility by approximately $200 million, accelerate the Board’s strategic capital expenditure programme and enable the distribution of up to $40 million to the co-operative, subject to livestock supply.

Alliance Group will be holding a series of roadshow meetings over September-October for shareholders to attend ahead of a special general meeting in Invercargill on 20 October.

“We encourage all shareholders to attend the upcoming roadshow meetings and to vote to accept the offer,” says Wynne.

“Every vote is going to count. Accepting to enter into this joint venture will create an enduring foundation with the potential to deliver long-term profitable growth for our shareholders.”