Dawn Meats takes 65% stake in Alliance Group in major industry deal
Alliance and Dawn Meats have completed their new strategic partnership.
Dawn Meats chief executive Niall Browne told Rural News that Dawn Meats conducted comprehensive due diligence on Alliance's plant network as part of the process.
"Following the difficult but necessary decision to close the Smithfield plant in Timaru, we're confident Alliance's processing capacity is well balanced with livestock flows. We have no plans for plant closures," Browne says.
"Alliance has returned to profitability after two very tough years. We aim to build on this profitability through our expertise in resource efficiency, especially around water, energy and yield optimisation. We believe we can extract more value from the existing footprint.
"The best way to be competitive at the farmgate is to run an efficient, profitable business that's connected to premium global markets, and that's exactly what this partnership enables."
Over 87% of Alliance farmer-shareholders voted in favour of Dawn Meats' $270 million investment. One of Europe's leading red meat processors, Dawn Meats will acquire a 65% shareholding in Alliance Group, with farmer-shareholders retaining a 35% stake.
The deal is moving through the final regulatory and legal steps. The new joint venture should be up and running next month. Dawn Meats will have three directors on the new board, with two appointed by Alliance.
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Browne, who was in New Zealand last month, is encouraged by the positive reception from farmers to the outcome of the vote.
"I had constructive discussions with a range of farmers while in New Zealand. The farmers I spoke to are excited about the future and the opportunities this partnership with Alliance will unlock," he says.
Feedback from Dawn Meats' global customers has also been very positive.
"We've had very positive feedback from customers at major international trade fairs like Anuga in Germany," says Browne.
"They value New Zealand product and are already asking about year-round supply arrangements. That's new business that Alliance will now be able to access through Dawn's extensive European and UK sales network.
"Those higher-value, longer-term relationships give us the confidence and capability to pay competitive livestock prices while maintaining profitability."
Browne acknowledged the farmgate competition in New Zealand among meat processors, but he adds that Dawn Meats isn't fazed.
"Dawn didn't get to where it is today by not being competitive with livestock pricing.
"Our success has been built on efficiency, strong customer relationships and paying farmers fairly for quality livestock. That same philosophy will apply in New Zealand."
While in NZ, Browne also attended the inaugural European Union/New Zealand Business Summit in Auckland.
In a panel discussion, he described the joint venture as a big deal for both companies.
He pointed out that Dawn Meats is a large packer of Alliance-supplied New Zealand lamb in the UK retail space.
"We appreciated the top quality of their grass-fed beef, lamb and venison, and the integrity of the business.
"And, so when the opportunity came up to partner, there was no decision to make, it was a no-brainer.
"They have the same values as us, we appreciate the quality of their products, the long-term relationships with their farmer base - they're all key ingredients to success."
The deal also gives Dawn Meats a stronger foothold in the global sheepmeat trade.
Dawn Meats specialises more in beef and is big in the UK and Europe. Browne says Alliance are "experts in lamb" and have great markets in North America and Asia.
"So, when you combine those two elements together, you've got the recipe for success."
