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.
The co-operative has pushed back its annual meeting to December to allow more time for farmer consultations.
Last week, board directors including chair Peter McBride attended farmer meetings throughout the country. The Auckland-based Fonterra management team couldn't attend due to Covid travel restrictions.
Speaking to Rural News before embarking on the farmer roadshow, McBride was confident farmers would back the latest proposal that includes key changes.
However, he says the board is open to tweaking the proposal.
"Let's see how the conversations evolve. We are prepared to tinker with the proposal but it is hard to accommodate everybody," McBride told Rural News.
"The key changes we've made strongly reflect on aspects we heard from farmers."
McBride, who attended farmer meetings in the lower South Island, wants to meet as many farmers as he can.
"I'm keen to look them in the eye and for them to hear the conviction of my voice - that this is in the best interests of the co-op."
Fonterra's chair says the co-op's annual meeting, normally held in November, has been pushed back to December allowing more time for farmer consultations and work on the final capital structure proposal.
While no date has been set for the AGM, McBride says it is unlikely to go past December.
The revised capital proposal was announced on the same day the co-operative released its new strategy to focus on New Zealand milk.
McBride says the capital structure and strategy go hand-in-hand.
"We are confident that this proposal would support the sustainable supply of New Zealand milk that our long-term strategy relies on.
"One enables the other, and together they give our co-operative the potential to deliver the competitive returns that will continue to support our families' livelihoods from this generation to the next."
Key changes in the revised capital structure proposal are that the new minimum shareholding requirement would be set at 33% of milk supply (around 1 share per 3kgMS), compared to the current compulsory requirement of 1 share per 1kgMS and new maximum shareholding requirement would be set at 4x milk supply, compared to the current 2x milk supply.
More types of farmers - sharemilkers, contract milkers and farm lessors - will be able to buy Fonterra shares and exit provisions would be extended and entry provisions would be eased.
The Fonterra Shareholders Fund would be capped to protect ownership and control.
