Satara Co-operative Group Ltd says EastPack Ltd has baled out of the proposed merger between the two companies, as a result of the bacterial infection spreading through the nation's kiwifruit orchards."EastPack has indicated that its decision is due
Satara Co-operative Group Ltd says EastPack Ltd has baled out of the proposed merger between the two companies, as a result of the bacterial infection spreading through the nation's kiwifruit orchards.
"EastPack has indicated that its decision is due to significant commercial uncertainty it believes the recent Psa bacteria outbreak has had on its orchards and the industry in general, and the associated impact on the availability and pricing of capital from their banking provider to fund the merger," Satara told the NZX.
Satara, which is listed on the alternative index, announced in September that it was looking to merge with EastPack to form a wholly grower-owned company.
Since the disease incursion, Satara directors had unsuccessfully sought to renegotiate merger terms.
They said a recent unconditional agreement to sell Satara's surplus Totara Street property in Mount Maunganui, Satara is confident of the relative strength of its balance sheet. "Satara continues to consider that the potential impact of Psa on its 2011 crop supply will be minimal".
The companies had planned on merging their businesses to form a wholly grower-owned unit, but last month put the merger vote on hold as the companies renegotiated the price and deal structure.
The kiwifruit industry and taxpayers are jointly funding a $50 million compensation package to manage Psa, but the costs of the battle against the bacteria have been estimated at $75m, with growers expected to fund most of the additional amount..
Satara said the bacteria had had a "minimal impact" on its crop, with three of its orchards testing positive for Psa, and it does not expect a "significant" affect on its supply.
Psa became a serious problem in Zespri's Hort16A (gold kiwifruit) and the Jin Tao cultivar in Italy during the last season with economic damage estimated in millions of euros. In April, Opotiki-based post-harvest group Opac announced it might have to write off its NewGold orchard there. Satara has a 20 percent stake in Opac.
Before the disease incursion was discovered, EastPack chairman Ray Sharp said EastPack and Satara were two like-minded co-operatives.
EastPack Ltd has rejected a proposed merger with another kiwifruit group, Satara Co-operative Group Ltd, because of the bacterial infection spreading through the nation's kiwifruit orchards.
EastPack: 2010 packed 16.7m Class 1 trays
For the financial year ended December 31 2009:
Revenue $61.2m
Operating Profit before rebates $8.8m
Operating profit before tax $5.3m
Operating profit after tax $3.98m
Sites: Opotiki, Edgecumbe, Te Puke Quarry Road
Satara: 2010 packed 8.5m Class 1 trays
For the financial year ended December 31 2009:
Revenue $56.6m
Operating Profit before rebates $3.1m
Operating Profit before tax $1.3m
Operating Profit after tax $0.9m
Sites: Washer Rd and Collins Lane (Te Puke), Griffin Rd, (Tauriko) Marshall Rd (Katkati), Glenbervie, Poroti
