Red meat processor Dawn Meats has agreed to invest NZ$250m (£110m) in New Zealand’s largest processor and exporter of sheepmeat Alliance Group in return for a 65% stake.
The board of the New Zealand group selected Dawn Meats as its preferred long-term strategic partner following a two-year process to reset and recapitalise the business.
Alliance’s board informed its 4,300 farmer shareholders of the decision and unanimously recommended the partnership today (12 August). The deal needs approval from a minimum of 75% of voting shareholders at an upcoming special general meeting to be held in New Zealand in mid-October.
If approved, Alliance plans to use proceeds from the transaction to reduce its short-term working capital banking facility by NZ$200m, accelerate the board’s strategic capital expenditure programme and enable the distribution of up to NZ$40m to the Alliance co-operative, subject to shareholder livestock supply.
“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,” said Dawn Meats CEO Niall Browne.
“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.”
If Alliance’s shareholders fail to support the proposed investment, the group’s board said it would be forced to enter into a process led by its banking syndicate, which could involve possible asset sales, further site closures and further cost reduction initiatives.
Alliance operates six processing plants in New Zealand and exports sheepmeat and beef to more than 65 countries.
Alliance chairman Mark Wynne added: “Alliance was built by farmers for farmers and has a proud co-operative 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.”
Dawn Meats was established in Ireland in 1980 and now generates more than €3bn in annual revenues. It employs in excess of 8,000 staff in 10 countries, including in the UK where it trades as Dunbia, and processes about one million cattle and 3.5 million sheep a year.
“Our ‘can do’, keep-it-simple and commonsense culture aligns naturally with Alliance,” Browne said. “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.”
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