Fonterra shareholder council keeps valuer

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Fonterra shareholder watchdog, the shareholders' council, has reappointed Grant Samuel as the dairy giant's independent share valuer.

The farmer-elected council appoints the valuer to determine a restricted market value range and fair value range of a cooperative share for each dairy season.

The restricted market value range reflects that shares in New Zealand's biggest company can only be held by supplying farmers.

The fair value range assumes an open market value as if Fonterra shares were freely tradeable.

The council is also responsible for ensuring the valuer acts in accordance with the Fonterra constitution.

The fair value and restricted market value are determined by Fonterra directors within the valuer's recommended range.

This year Grant Samuel will have to consider when determining the restricted market value range the introduction of share trading among farmers, an outcome of Fonterra's capital restructure.

The valuer has been reappointed to recommend the 2011-2012 share values.

The farmer-owned co-operative has set the fair value share price for the current 2010-2011 season at $4.52 per share.

Shareholders resolved to move to a restricted market value range late last year.

Grant Samuel has determined for the 2010-2011 season a restricted range of $3.95-$4.58 per share with a mid-point of $4.27, an 11 per cent increase on a mid-point of $3.83 estimated in December.

As Fonterra is transitioning to a restricted market value approach, the share price is being effectively held at $4.52 until the restricted market value mid-point reaches this level.

During this transition, the valuer is continuing to also provide a view of an unrestricted fair value share price.

For the 2010-2011 season this has been determined to be $5.26-$6.11 per share, with a mid-point of $5.69 per share, up from an estimate of $5.10 in December.

- © Fairfax NZ News