Farmer Co-operative LIC is offloading its automation business that it has struggled to make a money earner.
The shock result is being blamed on uncertainty around Covid-19 and its impact on the global economy.
Over 70% of votes cast rejected the $108 million deal; only 27.5% of votes cast backed the deal. Just over 2% abstained at a special general meeting today.
LIC chairman Murray King says the board understands and respects its shareholders’ decision, particularly given these impacts and the wider domestic and global economic uncertainty.
“The market and economic volatility seen since late February saw shareholder uncertainty and nervousness about embarking on an acquisition increase through the voting period.
“When we announced this proposal, no one could have foreseen the rapid and unprecedented impacts of COVID-19 that resulted in material impacts on this acquisition, arising from exchange rate volatility, difficulty in efficient transfer of governance and risk of earnings impact for the Afimilk business.”
LIC announced in February that it was seeking shareholder approval to acquire a 50% stake in Afimilk, which develops and commercialises dairy farm technology and farm automation systems. The acquisition, valued at $108.7 million when announced, was conditional on a number of matters including shareholder approval.
King thanked shareholders for their careful consideration of the proposal.
“This was a significant, but achievable long-term strategic investment opportunity for LIC. The board and management team undertook a thorough and independently assessed due diligence process before recommending this investment to shareholders because it made strong commercial sense financially and strategically.
“It is vital that LIC keeps its world-leading edge in pastoral dairy farming data, while broadening access to new information to meet future needs and challenges.”