Affco and Alliance group may sidestep Norgate
Speculation is growing that two major meat industry players are contemplating a commercial alternative to the PGG Wrightson’s Silver Fern Farms merger. Highly placed sources say informal talks are planned this week between Affco and the Alliance Group.
Food Industry Weekly has also reported that PGG Wrightson chairman Craig Norgate’s proposed deal doesn’t appear to be legal.
Chairman of the New Zealand Co-Operatives Association Peter McDougall is quoted saying, “I’m sure that farmer members will be interested to know how the co-operative can retain its multi-ownership status with PGG Wrightson holding half of the voting shares. Although they will be coming on board as a transacting shareholder, the Co-Operative Companies Act 1996 only allows 40 percent of investor shares in a co-operative.”
Options on the Affco and Alliance Group agenda include the possibility of a “formal commercial alliance”, which would stop short of any official merger proposal. It is understood the meeting will involve senior executives from both companies, and the prospect has also been discussed at board level.
An industry insider who did not want to be named commented that, “Craig Norgate has caught everyone by surprise, but that’s how he works. The word is that the meeting’s on and that’s what it’s about”.
“Although Alliance was approached prior to the Norgate announcement, apparently it has decided to act now to protect its position, because it would be the most vulnerable if the Silver Fern project went ahead”, he told Food Industry Weekly.
The timing is designed to capitalise on shareholder concerns over surrendering market control, and the likely venue is Wellington.