Shanghai Maling pushes forward with Silver Ferns Farms deal
The Board of Silver Fern Farms, which had urged shareholders to accept the deal, announced the results of the vote today. Shanghai Maling, a listed company based in Shanghai is owned 38% by the conglomerate Bright Food Group which controls global brands including Weetabix.
Silver Fern Farms chairman Rob Hewett said the deal was “the breakthrough initiative” the business had been seeking in recent years.
“This is a very exciting day for Silver Fern Farms. The Board believes this partnership will be a defining moment for our business, the co-operative as a whole, and our supplying farmers. It is gratifying shareholders agreed.
“We have a partner in Shanghai Maling who will invest $261 million in cash for a 50% share of Silver Fern Farms’ business, in partnership with the existing Silver Fern Farms Co-operative. The investment will provide significant financial capability to accelerate our global ‘Plate to Pasture’ strategy. In addition, with the extensive retail and distribution assets of Shanghai Maling and the broader Bright Food Group in China, we will have a unique opportunity to establish Silver Fern Farms as the premium red meat brand in what is the world’s fastest growing protein market.
“The new Partnership will allow us to invest in the things we want to, not just the things we need to, which has been the position in recent times. The investment will see Silver Fern Farms have no debt and a positive cash position at next year end. Shareholders clearly understand, and appreciate, the magnitude of the opportunity in front of us.”
Dean Hamilton, Silver Fern Farms’ chief executive, said Shanghai Maling provided the company with a huge opportunity in China. “Shanghai Maling’s integrated supply chain model will allow us to advance our product development and consumer marketing abilities in China in ways we could not do ourselves, or with any other local or international investor,” he said. “This is a genuine game changing opportunity for our business.”
The proposed deal has not been without its opponents though, with some politicians and farmers concerned the deal will undermine Silver Fern Farms’ status as a co-operative, and hand power to a foreign company.
Under the deal, the chairman of the new 50/50 venture will be appointed by Shanghai Maling and will have a casting vote on board resolution.
Shanghai Maling shareholders will now vote on the deal on 30 October. If its shareholders agree to the deal, the companies will then have to seek regulatory approvals from both New Zealand and Chinese authorities. This process is expected to take several months. The transaction expected to come into effect between March and June 2016.