Dawn Meats takes 65% stake in Alliance Group in major industry deal
Alliance and Dawn Meats have completed their new strategic partnership.
The proposal is subject to shareholder acceptances, High Court and regulatory approvals. The deal values the NZ meat processor at $502m.
Proceeds from the transaction would be used to reduce Alliance Group’s short-term working capital facility by approximately $200 million, accelerate the board’s strategic capital expenditure programme and enable the distribution of up to $40 million to the co-operative, subject to shareholder livestock supply.
Alliance Group chair Mark Wynne said the announcement comes after a two-year process to reset and recapitalise the business.
“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 United Kingdom and Europe, and Alliance’s strength in lamb and market access across China, wider Asia and North America, there are significant commercial and operational synergies at stake – with potential for our shareholders to see the value of their residual 35 per cent stake grow over the long term.”
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Wynne says the recapitalisation process explored several options in the interests of shareholders and has successfully generated a very compelling offer, which the board has unanimously endorsed.
“We encourage all shareholders to attend the upcoming information sessions and vote to accept the offer.”
The transaction is to be implemented via a Scheme of Arrangement and will require a minimum of 75% shareholder acceptance of those who vote, and greater than 50% per cent of all shareholding voting yes at a special general meeting (or via proxy) to be held in Invercargill in mid-October.
Alliance warns that if shareholders do not support the proposed investment, the Alliance Board would be obligated to enter into a process led by its banking syndicate, which may involve possible asset sales, site closures and further cost-reduction initiatives.
Dawn Meats Group chief executive Niall Browne says his company has a successful operating and investment track record in Ireland, the UK and the European Union.
“Having the ability to grow in partnership with some of New Zealand’s leading farmers and create year-round supply for our customers between the Northern and Southern Hemispheres is an opportunity we are deeply committed to and take very seriously.
“Our ‘can do’, keep-it-simple and commonsense culture aligns naturally with Alliance. 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.”
Dawn Meats Group is a family-owned business established by three farming families in Waterford, Ireland, in 1980. It has 24 facilities and over 8,000 employees in 10 countries, processing more than 3.5 million sheep and one million cattle per annum, with a core annual turnover of $5.8 billion.
Dawn Meats has a stable of strong and well-recognised brands, including operating the Dunbia brand in the UK. Through these businesses, Dawn Meats Group serves major retailers, manufacturers and foodservice operators in over 50 countries.
Wynne acknowledged the hard work of Alliance’s management, operational and Board teams to position Alliance for high-quality external investment.
“In the last 18-24 months, we have implemented a huge amount of change across every aspect of the business. This is an opportunity to lay an enduring foundation that will offer an opportunity for Alliance to thrive and deliver more value to our farmers.”
Alliance shareholders will have a chance to have their say at farmer roadshows starting September 29. If approved by farmer shareholders, regulatory approvals are expected to be in place for the deal to go ahead by December this year.
