Farm supply giants to merge
A strong presence has emerged in rural service trading with the merger of co-operatives Farmlands and CRT into a $2 billion business after shareholders gave their final support.
Christchurch-based CRT easily cleared the necessary 50 per cent hurdle when its shareholders gave the green light in a second special vote at an Invercargill meeting and Farmlands shareholders also backed the merger case in Palmerston North.
Farmlands chairman Lachie Johnstone will be the new chairman of the establishment board of the merged co-operative, with CRT chairman Don McFarlane to act as his deputy.
McFarlane said they were pleased with the outcome.
‘‘We have the result [we needed] and the meeting went well with an 85 per cent vote in favour at the second meeting. So it was well and truly confirmed and we are ready for a start on the first of March.’’
Shareholders will receive a bonus share issue of $32 million shares in a distribution of retained earnings and unallocated reserves of the two co-operatives before they merge.
The co-operatives will also distribute more than $8m in an interim bonus rebate to shareholders from trading between July to December. The rebate will be paid in a 60/40 share/cash split.
The decision clears the way for a Friday merger of the two businesses, creating a nationwide farm supplies co-op with 54,000 members, more than 1000 staff, 47 farm supplies stores in the North Island and 31 in the South Island and combined historic sales of $2b a year.
Johnstone said the establishment board and management would move quickly to ensure merger gains were captured on behalf of shareholders.
All shareholders would soon receive information about the bonus issues to be completed as part of the new capital structure of the merged co-op, he said.
McFarlane said the quality of the analysis and consultation process was a tribute to both management teams and boards.
‘‘It’s an historic milestone for both societies, and one that I am sure we will look back on as a valuable and worthwhile step.’’
For CRT this represents the latest of at least five mergers. Since its last eight years ago sales and profits have increased fourfold and the shareholder base has gone from 18,000 members to 26,000 with turnover rising from about $380m to $1.2b.
Leaders of both co-operatives were given a clear signal the merger would succeed in the first round of voting at Christchurch nearly two weeks ago when CRT shareholders were 85.5 per cent in favour and Farmlands shareholders gave their 82 per cent approval at a Hamilton meeting.