Buttery prize
OPINION: Westland Milk may have won the contract to supply butter to Costco NZ but Open Country Dairy is having the last laugh when it comes to cashing in on NZ grass-fed butter.
Yili’s offer of $588 million, or $3.41 a share, would return the average Westland farmer about $480,000. Although supported by the Westland board, to succeed it will need the support of 50% of all eligible voters, and 75% of votes cast, at a closed meeting of shareholders in Greymouth on July 4.
Southern Pastures says it will abstain because it wants to allow greater weight to votes from West Coast shareholders whose livelihoods will be impacted by any deal.
Prem Maan, the executive chairman of Southern Pastures, said the decision was the result of careful deliberation. “Our Westland supplying farms are situated in Canterbury, and as such we are in the fortunate position of having options for who we supply.
“Many of our fellow shareholders in Westland aren’t so well placed. So, we believe we have a moral obligation to leave the critical decision on whether or not the offer should be accepted to those Westland shareholders on the West Coast who have, and will have, no other supply options.”
Maan said Southern Pastures felt that Yili had made a fair offer and would consider working with Yili if it was successful.
“We will, however, be sad to see the demise of the cooperative if that were to happen. We are strongly committed to the cooperative model and, in fact, joined Westland and formed our joint venture, New Zealand Grass Fed Milk Products LP, with it because it was a farmer owned cooperative.”
Southern Pastures says butter produced by that joint venture is now a finalist in the best butter/dairy spread category in this year’s World Dairy Innovation Awards.
Owned mostly by European ethical pension fund investors, Southern Pastures is the largest institutional farming fund in New Zealand. It also owns 50% of Lewis Road Creamery. Its nine Canterbury farms produce 4 million kgMS/year and have supplied Westland since the start of the 2018-19 season.
Meanwhile, the Westland board has urged all shareholders to “exercise their votes” at or before the meeting on July 4.
In a statement, chairman Pete Morrison says it is important that “all shareholders participate in the vote”. “This is a very important decision for Westland farmers and we want all shareholders to participate.”
For the deal to be approved, at least 75% of the votes of all shareholders who are entitled to vote – and who actually vote – must be voted in favour of the deal. At least 50% of the votes of all shareholders entitled to vote -- whether or not actually voted -- must be voted in favour of the deal.
“It was pleasing that many of our shareholders attended the recent farmer consultation meetings,” Morrison said.
The meeting had “robust but open and inclusive discussions” where shareholders were able to “air their opinions and question the board more closely on the specifics of the proposed deal”.
“The next step is for shareholders to make their decision and vote.”
Under the deal, existing Westland suppliers will receive $3.41 per share and the guarantee of the company collecting milk and paying a minimum payout of the Fonterra farm gate milk price for 10 seasons from the season commencing August 1, 2019.
