Dawn Meats selected as preferred strategic partner by New Zealand’s Alliance Group.
Irish food business Dawn Meats plans to acquire a 65% stake in New Zealand’s Alliance Group for €127.7m (NZ$250m).
The business has been named the preferred long-term strategic partner by the Board of Alliance Group, a New Zealand-based meat producer.
“Our ‘can do’, keep-it-simple and commonsense culture aligns naturally with Alliance”
The proposed partnership is subject Irishto shareholder approval and would involve Dawn Meats investing NZ$250 million to acquire a 65% stake in the co-operative.
Alliance Group’s farmer-shareholders were informed of the Board’s recommendation this week. The transaction also requires approval from the New Zealand High Court and relevant regulatory authorities.
If approved, the investment proceeds would be used to reduce Alliance Group’s short-term working capital facility by NZ$200 million, support the Board’s strategic capital expenditure programme, and enable a distribution of up to NZ$40 million to the co-operative, contingent on shareholder livestock supply.
World class produce
“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,” said Niall Browne, chief executive of Dawn Meats.
“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.”
He added: “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.”
The proposed transaction will be implemented via a Scheme of Arrangement. It requires 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. The meeting is scheduled to take place in Invercargill, New Zealand, in mid-October.
The Alliance Board has stated that if shareholders do not support the proposed investment, it would be obligated to enter a process led by its banking syndicate. This may involve asset sales, further site closures and additional cost-reduction initiatives.
Mark Wynne, chair of Alliance Group, said the announcement follows a two-year process to reset and recapitalise the business.
“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. There is potential for our shareholders to see the value of their residual 35 percent stake grow over the long term.”
Main image: Niall Browne, chief executive of Dawn Meats
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