Alliance Group has entered into an agreement with Scales Corporation to acquire a 50 percent interest in Meateor’s New Zealand petfood business as the co-operative seeks to capture more value for its farmer-shareholders.
Hawke’s Bay company Meateor is a processor and marketer of high-quality pet food ingredients to global petfood customers and Alliance Group is a supplier of raw materials to this sector.
Under the terms of the joint venture, Alliance will pay $15 million to acquire a 50 percent interest in Meateor’s New Zealand business. The new joint venture business is valued at $30 million and is funded equally by both partners.
Alliance Group chief executive David Surveyor says the investment in Meateor reflects the co-operative’s strategic focus on creating value-add solutions.
“The joint venture extends Alliance’s downstream reach, allows Alliance to become vertically integrated and ensures we have an end-to-end connection with the market.
“It will mean Alliance can capture more value for each animal, shifting us further up the value chain. As a co-operative, we will be ensuring those gains go to our farmer-shareholders.
“The business provides us with immediate and direct access to the highly attractive and growing global petfood market. This investment also gives Alliance Group the leading position in the New Zealand petfood market with Meateor operating processing plants in both the North and South Islands.
“Meateor has established itself as a strong domestic and international petfood ingredients business, and we are pleased to be partnering with their high quality team. We admire Meateor’s excellent customer service, commitment to employees, and high operating standards, and believe they align well with our goals at Alliance.”
The partners are keen to progress opportunities to further develop and grow the business, says Surveyor.
“This acquisition comes with a highly capable management team at Meateor, a strong partner in Scales Corporation and the delivery of immediate earnings for Alliance and our farmer shareholders.
“The investment coincides with a time of major growth in the global pet food industry. Global sales in the sector are forecast to reach up to NZD134 billion by 2022 and we want to make sure New Zealand farmers are a part of this growth.
“The demand for premium quality meat ingredients is growing as pet owners around the world become increasingly focused on pet health and food quality. Our New Zealand farmers’ produce is well positioned to meet this need.”
Scales Corporation managing director Andy Borland says: “We are pleased to enter into a partnership with one of New Zealand’s leading farmer co-operatives. This venture is about developing New Zealand as the premier supplier of petfood proteins.
“We think the venture provides a number of benefits to the entire New Zealand petfood-supply industry including as an avenue for the industry to improve scale; improved relationships with customers including the ability to commit to longer-term relationships; an ability to move into higher value and added value ingredients; and an ability to leverage extended customer and supplier networks.”