New Zealand: kiwifruit co-ops close to decision

Kiwifruit cooperatives EastPack and Satara are close to deciding whether or not to proceed with a merger that would create New Zealand's biggest kiwifruit packaging and cool storage business. The Bay of Plenty cooperatives are holding board-level discussions after a merger proposal sent by EastPack to Satara shareholders in April.

Though Satara chairman Andrew Fenton has said the Satara directors cannot accept EastPack's original proposal, the two companies are trying to come up with a new proposal to take back to shareholders. Meanwhile, a group of Satara shareholders, collectively holding more than 5 per cent of the cooperative, has been asking directors to call a meeting to consider EastPack's proposal.

Satara had not called the meeting so far because it preferred to have the discussions at board level, general manager Murray Gough said. Both Satara and EastPack were hoping for an outcome from those discussions within a month, he said.

In its April proposal, EastPack said the merged business would handle 26 per cent of the national kiwifruit crop, would have income of more than $85 million a year, total assets of more than $90 million and would achieve savings of more than $2 million within a year.

A key feature of the proposal was that the new company should be 100 per cent grower-owned and that Satara's non-grower shareholders would be bought out at $1.40 a share. Mr Gough said Satara was receptive to the proposal from EastPack. "You have to be supportive of the merger of these two companies. But the outcome in terms of how it's done has to be a good deal for both groups of shareholders. It just comes down to negotiating the details."

EastPack general manager Tony Hawken said the reaction to April's proposal from Satara shareholders had been favourable. "The general feedback that we got is, yes, it makes a whole lot of sense as long as it's fair to both sets of shareholders." The two cooperatives were in merger discussions last year, but they broke down because of differing views on valuation, Mr Hawken said.

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