Wednesday, 17 April 2024 11:55

Green light for acquisition

Written by  Sudesh Kissun
SealesWinslow was established in 1968. SealesWinslow was established in 1968.

The merger of two of the country’s largest animal nutrition companies won’t lessen competition, the Commerce Commission has ruled.

The ruling allows rural trader Farmlands to acquire SealesWinslow from fertiliser co-operative Ballance on June 1 this year. SealesWinslow will continue to produce its own brand of nutrition products and service its existing customers. It will also increase Farmlands’ feed manufacturing footprint into the North Island which includes NRM and McMillan feeds businesses.

The Commission says that in reaching its decision, it considered the potential impact of the proposed acquisition on competition in regional markets for the bulk supply of supplementary feed for ruminants and, separately, the bagged supply of supplementary feed for ruminants, particularly for calves.

The Commission raised potential concerns with the proposed acquisition because Farmlands and SealesWinslow are the two main suppliers of bulk and bagged pelletised compound feed for ruminants in various regions across New Zealand.

However, after further investigation, division chair Dr Derek Johnston says the Commission is satisfied that the acquisition is unlikely to substantially lessen competition in any New Zealand market.

“Our investigation indicated that, while the merging parties are both significant suppliers of pelletised compound feed for ruminant animals such as dairy cows and calves, they also compete with suppliers of other types of supplementary feed for ruminants.”

These other feeds include single grains, often referred to as ‘straight’ feed, or feed that is a combination of grains, often referred to as ‘blend’ feed.

‘blend’ feed. “This means that farmers have choices other than just pelletised feed. As a result, we are satisfied that Farmlands is unlikely to be able to significantly increase prices, or lower the quality, of its bulk and bagged feed,” says Johnston.

During its public consultation, the Commission received one submission, apart from a joint submission from Ballance and Farmlands supporting the acquisition.

The submission from Neil Burndred, Takanini Feeds, stated that it didn’t make sense for Farmlands to purchase all three mills and the business from Ballance.

He submitted that the purchase of the Morrinsville mill by Farmlands does make some sense, especially regarding the supply of bagged products to Farmlands stores in the North Island.

“It will cause some issues for the smaller North Island mills, but I believe they will adapt and survive and continue to slowly grow.

“I personally don’t see the sense in Farmlands purchasing Whanganui, but I guess that is their call.

“I don’t believe that purchase is a good investment for their shareholders. Whanganui is a mill that could be converted to a poultry mill and possibly sold off to one of the commercial poultry businesses. Perhaps that is part of their overall plan. I do see real issues with the purchase of the Ashburton mill and the monopoly that would give Farmlands in the South Island. History shows that they could consider closing the mill moving all production to their other site,” Burndred wrote.

He supported Ballance’s decision to move out of the stock feed industry.

“Their proposed sale to Farmlands gives them a chance to recover some of their investments and a way of exiting an industry they should never have been involved in. I see Farmlands as another corporate trying to set themselves up as the biggest player in the market. I personally think that they are making a mistake taking on all the manufacturing assets of Ballance and that this move is not in the best interests of their shareholders. A partial purchase makes more sense.”

Farmlands says the combination of its expertise in bulk and retail feeds and SealesWinslow’s ruminant business will offer the co-operative the chance to leverage different expertise and skills, making it easier to diversify the coop’s offerings across the animal nutrition sector.

Farmlands says the combination of its expertise in bulk and retail feeds and SealesWinslow’s ruminant business will offer the co-operative the chance to leverage different expertise and skills, making it easier to diversify the coop’s offerings across the animal nutrition sector.

Tanya Houghton 3 FBTW

Farmlands chief executive, Tanya Houghton.

Great Match

Farmlands chief executive Tanya Houghton says that SealesWinslow is a great match for Farmlands, combining a co-operative heritage, strong feed assets and expertise.

“Bringing our combined assets, expertise and market reach together, offering three leading animal nutrition brands, we’ll increase our ability to create long-term benefits and value for shareholders and customers.

“We’re very excited to be able to welcome the SealesWinslow team into our Farmlands whānau. We’ll be one huge step closer to achieving our goal of being the number-one supplier of animal nutrition to New Zealand farmers.”

Ballance Agri-Nutrients chief executive Kelvin Wickham says the divestment aligns with Ballance’s focus on its core of providing reliable and affordable supply of nutrients for New Zealand farmers and growers.

SealesWinslow was established in 1968. In 2011, Ballance purchased 51% of SealesWinslow and acquired the remaining 49% in 2013.

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