What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
Fonterra chairman Henry van der Heyden hopes to “push the button” on TAF before he steps down at the 2012 annual meeting in November.
“Capital structure and developing TAF will be one of my last acts before I leave,” he told Dairy News.
He points out TAF has been a long process. Farmers voted overwhelmingly to move from share redemption to TAF to bolster the co-op’s balance sheet. TAF requires a review of the Dairy Industry Restructuring Act by Parliament.
Van der Heyden and the Fonterra board had initially hoped to launch TAF this year. But uncertainty among farmers and the previous Government’s preoccupation with the Christchurch earthquake recovery prevented the legislation from reaching Parliament. Several inquiries over milk pricing also compounded the situation.
Van der Heyden agrees TAF could never go ahead with “milk price questions hanging over us.”
“Now the new Government is confirmed and all milk inquiries have been dealt with, we have clean air to move on with TAF,” he says.
Fonterra had been briefing Prime Minister John Key, Finance Minister Bill English and Agriculture Minister David Carter in the previous Government. With Key and English back at the helm, and Carter almost certain to continue in his old job, progressing TAF will be easier.
Van der Heyden says it had also briefed other political parties and TAF would still have been achievable if Labour had won power.
On farmer concerns about TAF, particularly relinquishing share titles to a custodian, van der Heyden point out it has “quite a big mandate” from farmers to proceed with TAF. However, new chief executive Theo Spierings also announced at Fonterra’s recent annual meeting that management is looking at the possibility of farmers owning legal titles to shares held in the proposed Fonterra Shareholders Fund.
“We are listening to farmer concerns and we will brief them before Christmas as Theo told the meeting,” says van der Heyden.
Fonterra expects the new Government to release a discussion document on changes to DIRA early next year. A round of shareholder meetings is also being planned in early 2012.
Van der Heyden says his decision to stand down has nothing to do with farmer concerns on TAF. Success planning has been underway by the board for the last two years.
