Silver Fern Farms and Lowe Corporation have entered into a conditional agreement to sell the cooperative’s Napier hide processing plant as part of a toll processing arrangement for North Island hides.
Silver Fern Farms’ staff at the cooperative’s Napier ‘Leathers’ hide processing plant were consulted this morning regarding the proposal to sell the business to Lowe Corporation who are currently undertaking due diligence.
Lowe Corporation proposes to purchase the leathers business with the intention to run it as a going concern, with the proposal to transfer all staff on their existing terms and conditions to Lowe Corporation.
As part of the proposed purchase agreement Silver Fern Farms would toll process the majority of its North Island hide business through Lowe Corporation facilities to bring about further efficiencies of scale to the collective businesses says Silver Fern Farms chief executive Keith Cooper.
“Over the past few months we have undertaken a strategic review of the North Island pelt and hides processing area of our business with a view of optimising returns, reducing costs and lifting our focus on our core business – producing world class red meat,” says Cooper.
“Although the agreement is conditional; the proposal from Lowe Corporation is highly collaborative and brings about efficiencies of scale and a pooling of expertise for the greater benefit of both our businesses.”
Longer-term the agreement has potential to avoid duplication of future capital investment across the industry.
“Our sector is asking for this kind of collaboration and we have been investigating various options where we can play a part in bringing greater returns to the sector.”
In 2013, the two companies established a toll processing agreement for North Island pelts which has already brought about benefits for both companies according to Lowe Corporation managing director Andy Lowe.
“Lowe Corporation aims to be New Zealand’s experts in the processing and marketing of hides, pelts and wool to revitalise the sector. We are looking at ways to realise that vision. This includes investing in growing our business and ways we can partner with others.”
Staff at the plant were presented with the proposal and have entered into a consultation period before any final decision on the agreement is made. Lowe Corporation intends to undertake a due diligence process which should be concluded by Friday 21 March. The results of the due diligence and the consultation process will then be assessed and a final decision will be announced on Tuesday 25 March.
Material supplied by Silver Fern Farms.