Opponents of a deal to sell half of Silver Fern Farms to China’s state-owned Bright Foods, increasing the dominance of New Zealand’s largest meat processor while leaving it debt-free, say they will continue to push for a locally funded alternative.
The board of Silver Fern Farms (SFF) has unanimously recommended accepting the proposal for a 50:50 joint venture with Bright Foods subsidiary Shanghai Maling Aquarius, which would invest $261 million in the business through a transaction that values SFF’s equity at $311 million. The new SFF would be half-owned by the current cooperative and half by the Chinese firm. Goldman Sachs is advising SFF.
A special dividend of $35 million, or 30 cents a share is being dangled in front of the cooperative’s ordinary and rebate shareholders providing half of them vote in favour of the transaction at a special general meeting on October 16. Before then, the company plans to embark on a roadshow to promote the merits of the deal.
Meanwhile, a recent editorial in The Listener commented: “Should Silver Fern’s shareholders be cautious about the proposed merger? Well, yes. The Chinese haven’t decided to invest $261 million in the company because they were seized by a sudden altruistic urge to help our farmers. Misgivings about the deal have nothing to with xenophobia. The merger would make the farmers who supply Silver Ferns dependent on a command economy where nothing happens without the approval of the state. If China’s interests should clash with those of the New Zealand farmer, it’s not hard to pick whose will prevail, no matter how much gloss Silver Fern tries to put on the deal.”
Shanghai Maling is a listed company on the Shanghai stock exchange. It is part of Bright Foods group, which through another company has 38% share of the NZX-listed Canterbury dairy exporter, Synlait Milk.
