Silver Fern farmers vote for merger

By MARTA STEEMAN - The Press | Monday, 08 September 2008

Silver Fern Farms farmer-suppliers have voted to sell half the meat company to PGG Wrightson for $220 million.

The vote will form a partnership between New Zealand's biggest meat processor and exporter and its biggest rural services firm.

It will also break a 60-year cooperative history and turn SFF into a hybrid half owned by farmer-suppliers and half by a listed corporate, PGG Wrightson, with changes to the constitution to protect the influence of farmers.

Eoin Garden, Silver Fern Farms' chairman, said farmers had voted for change and he was delighted with the result.

``We strongly believe partnering with PGW is in the best interests of Silver Fern Farms' suppliers and, going forward, the wider pastoral sector.''

Some 75.62 percent of the votes cast were in favour of the partnership with the deal requiring 75  backing from SFF farmer-suppliers. More than 83.3 percent of eligible votes were cast.

One hundred percent of the votes cast at the special general meeting today in Dunedin voted in favour of the proposal.

Before the meeting a SFF spokesman said the votes at the meeting would determine the outcome.

Under the partnership PGW will contribute $220m to recapitalise Silver Fern Farms, which will have shareholders' funds of $510m and an equity ratio of 80 percent. "

``It's an unprecedented injection of new capital into our industry, and farmers and shareholders in Silver Fern Farms will benefit significantly,"' said Mr Garden.

The two companies would create a vertically integrated supply chain -``from plate to pasture``- to better serve the needs of international customers.

PGG Wrightson chairman Craig Norgate and Garden said the two companies shared a vision for the industry which included driving for further consolidation- an olive branch to rival Alliance Group to consider a merger some time in the future.

Today's vote is a coup for Norgate, a former Fonterra chief executive, who has already driven consolidation of three rural services companies and sees value for PGGW from the tie up with SFF as fortunes in the sheep and beef sector come off their lows.