Co-ops take new bite at merger

ROB O'NEILL
Last updated 05:00 17/02/2013
kiwifruit
MARK TAYLOR/FAIRFAX NZ

Stronger force: Satara’s Hendrik Pieters says the deal will benefit grower and non-grower shareholders.

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Bay of Plenty-based kiwifruit and avocado co-operative Satara will delist from the NZAX if a merger with grower-owned fruit packer Eastpack succeeds.

The two co-operatives are having a second bite at a merger after their first effort fell apart in December 2010 amid uncertainty about the impact of the Kiwifruit bacteria Psa on local harvests.

The new plan involves the full buyout of non-grower investor shareholders in Satara, at a much reduced price per share since 2010, and the merging of that company with an Eastpack subsidiary, Eastpack Satara Ltd.

The strategy is to produce a vertically integrated structure akin to Zespri.

The chairmen of both companies jointly advised shareholders of the revised plan this month, saying it deserves shareholder support.

A letter said growers need every extra dollar to help them survive with a high New Zealand dollar and high costs related to the Psa kiwifruit bacteria infection.

Satara's non-grower investor shareholders and grower investor shareholders holding excess investor shares, are being offered 60¢ per investor share and a 5 cents fully imputed special dividend.

That is down from $1.25 per share offered under the 2010 proposal but a premium on the 45 cents a share quoted on the NZAX before announcement of the new proposal. Two years ago, shares were trading at $1.

Satara chairman Hendrik Pieters said the drop in value is a direct result of Psa and excess capacity in the industry combined with the depressed state of the property industry.

He said most of the non-grower shareholders were funds or private investors, but there had been little trade in the shares since Psa emerged.

Pieters said if the merger goes ahead, Satara will delist from the NZAX but investor shares held by growers will continue to be traded on Unlisted.

"For Satara's non-grower investor shareholders this merger offers an opportunity to exit their investment in Satara at a fair price, considering the current prospects for kiwifruit post harvest, at a substantial premium to the recent market price for traded Satara investor shares," the chairmen's letter to shareholders said.

"If the merger does not proceed, the prospects for a return on these shareholders' investment is low given the reduced pricing, low volumes and intense competition that prevails at present."

Satara's grower shareholders are being offered one fully paid EastPack transactor share for each dollar paid up on Satara transactor shares held, one EastPack investor share for each Satara investor share held and a 5 cents fully imputed special dividend for each Satara investor share held.

They can also buy additional EastPack investor shares at 65c each.

Pieters said Eastpack's success over the last few years put it in a strong position to fund the buyout of Satara investor shareholders, but the deal has advantages for all grower shareholders. It will help maintain volumes through the most effective processing sites to increase grower returns.

"The proposed merger will benefit both sets of shareholders and will put the resulting grower-owned company into a much stronger financial position relative to the standalone positions of Eastpack and Satara," the letter says.

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- © Fairfax NZ News

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