Dawn Meats has announced that it has been selected by the Board of Alliance Group as its preferred long-term strategic partner.
The proposed partnership, which is subject to shareholder approval, would see Dawn Meats invest NZ$250 million to acquire 65% of the shares in Alliance Group.
Farmer-shareholders in Alliance Group were informed of their Board’s preferred and unanimously recommended option. In addition to shareholder acceptances, the transaction is also subject to New Zealand High Court and regulatory approvals.
If approved, proceeds from the proposed transaction will reportedly be used to reduce Alliance Group’s short-term working capital facility by NZ$200 million, accelerate the Board’s strategic capital expenditure programme and enable the distribution of up to NZ$40 million to the Alliance co-operative, subject to shareholder livestock supply.
Niall Browne, chief executive officer at Dawn Meats, commented: “We are pleased to have been selected as the preferred long-term strategic partner of the Alliance Group and I would like to thank Alliance’s shareholders in advance for considering our offer.
“As the largest retail packer of New Zealand lamb in the UK, Dawn Meats is familiar with the high standards of the country’s grass-fed meat industry and its produce. We have worked closely with Alliance for many years in this regard, and we greatly admire the exceptional quality of their world class grass-fed lamb, beef and venison.
“Dawn Meats has a successful operating and investment track record in Ireland, the UK and in the EU. Having the ability to grow in partnership with some of New Zealand’s leading farmers and create a year-round supply for our customers between the Northern and Southern Hemispheres is an opportunity we are deeply committed to and take very seriously.
“Our ‘can do’, keep-it-simple and commonsense culture aligns naturally with Alliance. The opportunity here is to create a dynamic industry competitor with a unique combination of customer relationships, resources, skills, routes to market and industry knowledge that will give us a powerful competitive edge, both locally and globally.”
“We need this investment to provide certainty and confidence and ultimately unlock more value for our farmers.”
Mark Wynne, Alliance Group
Mark Wynne, Alliance Group chair, said the announcement comes after a two-year process to reset and recapitalise Alliance: “Alliance was built by farmers for farmers and has a proud cooperative legacy. The process we have undertaken on behalf of our farmer-shareholders to meet our banks’ requirements means we are now a much fitter and stronger business. However, we need this investment to provide certainty and confidence and ultimately unlock more value for our farmers.
“We are at a critical point where the business needs to evolve, but our commitment to farmers remains the same, and we believe Dawn Meats’ offer stands to secure and strengthen Alliance’s future.
“With Dawn Meats’ balance sheet power, strength in beef and market access across the UK and Europe, and Alliance’s strength in lamb and market access across Asia, China and North America, there are significant commercial and operational synergies at stake – with potential for our shareholders to see the value of their residual 35% stake grow over the long term.
“The recapitalisation process explored several options in the interests of our shareholders and has successfully generated a very compelling offer, which the Board has unanimously endorsed. We encourage all shareholders to attend the upcoming information sessions and vote to accept the offer.”
The proposed transaction is to be implemented via a Scheme of Arrangement and will require a minimum of 75% shareholder acceptance of those who vote, and greater than 50% of all shareholding voting yes at a Special General Meeting (or via proxy) to be held in Invercargill in New Zealand in mid-October.
If shareholders do not support the proposed investment, the Alliance Board has said it would be obligated to enter into a process led by its banking syndicate, which may involve possible asset sales, further site closures and further cost-reduction initiatives.
