Merger offers $38m in savings, farmers told
Senior management for CRT and Farmlands expect gains of $38 million will be made from the proposal to merge them into a $2 billion rural services business.
The extra income over three years would come from combining better buying, savings in office and information technology, and sharing the best of services.
A merger would allow the Farmlands horticulture brand (Skeltons) to be rolled out in the South Island and CRT's finance offering, bulk fuel delivery and feed and seed products would be extended to the North Island.
Farmer shareholders will have the final say on the merger proposal when they vote in mid-February after regional meetings throughout the country.
For the merger to go ahead 75 per cent of shareholder votes will need to be in favour with one vote received for each share they own.
A merged business would be near the top of the big three of farm supply businesses, rivalling PGG Wrightson and the Fonterra-owned RD1.
The combined business would have 54,000 members, 1000-plus staff, 47 stores in the North Island and 31 in the South Island and expected sales revenue of more than $2b.
Shareholders are digesting a letter received this week from CRT chairman Don McFarlane and Farmlands chairman Lachie Johnstone outlining the proposal.
McFarlane said the letter had explained the benefits for shareholders of a merger and it would only proceed if they passed special resolutions during the voting.
He said outside experts had confirmed its commercial advantage from extra buying power and leveraging from a nationwide business in farm supplies.
"So far the feedback (from shareholders) has been pretty good and I don't think there will be any great surprise in the strategy, but people have to be satisfied the homework has been done and the commercial case is sound."
Johnstone said management had presented a good proposal to the shareholders.
He said a critical factor in favour of blending the co- operatives was the lack of business overlapping.
Should the merger proceed Johnstone will be nominated as the founding chairman and CRT chief executive Brent Esler will have the operational duties.
McFarlane said he accepted he would lose his chairmanship and was committed to getting the best result for shareholders.
He said CRT had to move in the same direction as many mergers around the world to remain competitive.
Should the merger fail CRT would proceed as usual, he said.
Initially the branded Farmlands and CRT stores would continue and later transition into the Farmlands brand nationally.
No store closures are planned as CRT's retail business was chiefly concentrated in the South Island and Farmlands in the north.
Bonus shares and interim rebates would be issued in the transition to ensure fairness between the co-operatives.
- © Fairfax NZ News
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