News in Friday’s NZ Herald, sourced from the Silver Fern Farms’ merger pressure group’s Allan Richardson, notes that an overseas buyer wants 50 percent of the $2.3 billion turnover hybrid cooperative, Silver Fern Farms.
The apparent bid – initially from an unconfirmed market and buyer but the rumour mill is spinning towards a possible bid from Chinese state owned enterprise Bright Food – is conveniently and almost entirely along the lines of the ‘White Knight’ scenario put forward by Keith Woodward in May – $100 million capital injection in return for a 50/50 joint venture and equal boardroom control. With a projected net profit before tax of $15-20 million for the end September 2015 year, any serious bidder would expect to have a certain level of control on the board.
Apparently, there was also interest from Brazilian animal protein processing giant JBS, possibly along with others. News had also emerged earlier this year that the giant’s Australian branch was starting moves to buy into processing engineering company Scott Technology, in which Silver Fern Farms has a joint venture in the form of Robotic Technologies Ltd.
While the capital-raising exercise is ongoing, SFF’s doors are closed because of commercial confidentality, so we’ll have to wait for the imminent announcement.
However, given the disparity between beef and sheepmeat fortunes in recent years, maybe the offer’s for part of the hybrid cooperative company not the whole shebang? Just a thought: but sheepmeat could possibly be sold off separately to another buyer, perhaps to the world’s largest sheepmeat processor, the 100 percent Kiwi farmer-owned Alliance Group. That leaves beef and venison, a combination which SFF has previously said works well trading together. The beef market into the US and China has been strong and lucrative in the past year for New Zealand’s beef producers, including SFF supplier shareholders, and SFF has been following the money, investing in new beef product development through the Eating Quality Grading System and other initiatives.
Whatever happens, after a generation or so of Kiwi ownership, the New Zealand meat industry badly needs commercial investment to move into its next phase. Despite the scaremongering, spoilers and tinkering from farmer ginger groups and politicians, unless a serious Kiwi White Knight emerges, the levels required are simply not going to come from within, so it has to look outwards.
New Zealand meat is part of a global trading world. We need to embrace that.
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