Alliance Group takeover talks end with smaller meat processor Blue Sky Meats
Meat cooperative Alliance Group's talks about a potential takeover of rival South Island processor Blue Sky Meats have ended when Blue Sky withdrew after a failure to agree on key terms.
Invercargill-based Blue Sky withdrew from the "respectful and amicable" talks early this month after being approached by Alliance a couple of months ago, Blue Sky chairman Graham Cooney said in a statement. Both processing companies are based in Invercargill.
The farmer-led Meat Industry Excellence group has this year been pushing for closer integration of meat companies in an attempt to improve efficiency and boost profits. The group has gained representation on the boards of Silver Fern Farms, the nation's largest meat cooperative by revenue, and Alliance, the second largest.
Similar talks are underway in the wool industry as Wool Equities, which manufactures wool for its grower shareholders, and Primary Wool Cooperative, a farmer-owned joint venture with wool broker Elders, entered into talks about merging to boost returns as they eye the success of dairy industry giant Fonterra Cooperative Group.
In the last financial year, Dunedin-based Silver Fern posted a $28.6 million loss on $2 billion of revenue, while Alliance had profit of $5.6 million on $1.4 billion of revenue and Blue Sky Meats had a $3.87 million loss on $97.5 million of revenue.
Shares of Blue Sky trade on the Unlisted platform, and last traded yesterday at $1.20.