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.
“We have been forced to do this because, to date, we’ve not been allowed access to the official due diligence that we as farmers have all paid for,” group spokeswoman Leonie Guiney told Rural News last week.
At their own expense Guiney and others commissioned Dutch co-operatives analyst Onno van Bekkum to look at the success or otherwise of cooperatives elsewhere in the world that have pursued models that involve non-farmer equity in cooperatives.
“Part of the problem is there’s nothing to compare TAF with. But it is imperative some expert analysis from a cooperative viewpoint is made available to farmers in the next few weeks as we consider what is a critical vote for the future of our cooperative.”
She’s concerned Fonterra’s dossier of information, due to be mailed to shareholders late last week, including voting papers, will simply be too much for some to digest, and they’ll take the “trust the board” approach and just tick the boxes.
“We must continue to test the concept against our cooperative principles and remember why we’ve not prioritised share value as our primary goal in the past. People must understand what they’re voting on.”
She also believes the vote threshold should be 75%. “No board that prioritised the co-op would consider anything less to be a mandate.”
She notes chief executive Theo Spierings recently said co-op unity is more important than TAF. “The only way to ensure that unity is for any resolution to require 75%.”
Guiney is dismayed by what she believes is selective circulation of media commentary on TAF by Fonterra. For example, a recent Radio Live interview featuring Rod Oram repeating Fonterra chairman Henry van der Heyden’s line that there’s a vocal minority who don’t understand the TAF model was emailed to the entire supply base by Fonterra regional managers, yet interviews with Simon Couper about his reasons for standing down from the Shareholders Council were not.
“Couper was our elected representative who has seen the detail behind this and he’s stood down on principle because he doesn’t believe 100% ownership and control can be maintained. Yet they think Rod Oram’s comments are more important.”
As for the “vocal minority” allegation, signatories to a petition calling for a second vote on TAF alone represented $630m worth of Fonterra shares – about 7% of supply, she points out.
“The ones who signed are only the tip of the iceberg. Vocal minority? I don’t think so!”
Fonterra told Rural News it is not being selective in what it circulates. The Oram interview was sent by an area manager following farmer feedback expressing interest in independent reviews and comments on TAF. It is doing everything it can to ensure all the information is available to shareholders in time to be read, discussed and questioned, the co-op says.
The pack posted to farmers contains a 23-page report which is the same as the board received except for a few minor edits and exclusion of the appendices for commercially sensitive reasons.
In addition to next week’s 51 meetings, in the run-up to the June 25 special meeting and vote, farmers may call directors, shareholders’ councillors, networkers, area managers and members of the TAF project team. Questions posted on Fencepost will all answered and legally verified.
