82.22% vote in favour of Shanghai Maling Aquarius Group (Shanghai Maling) as new partner to secure an improved and sustainable future for Silver Fern Farms.
The Board of Silver Fern Farms announced today that a strong majority (82.22%) of votes had been cast in favour of 50/50 Partnership proposal with China’s leading meat processor Shanghai Maling, a listed company based in Shanghai, owned 38% by Bright Food Group.
Rob Hewett, Chairman of Silver Fern Farms, said shareholders throughout the country had shown enthusiastic support for the Shanghai Maling proposal since its announcement, with many calling this ‘the breakthrough initiative’ the business had been seeking in recent years.
“This is a very exciting day for Silver Fern Farms. The Board believes this partnership will be a defining moment for our business, the co-operative as a whole, and our supplying farmers. It is gratifying shareholders agreed.
“We have a partner in Shanghai Maling who will invest $261m in cash for a 50% share of Silver Fern Farms’ business, in partnership with the existing Silver Fern Farms Co-operative. The investment will provide significant financial capability to accelerate our global ‘Plate to Pasture’ strategy. In addition, with the extensive retail and distribution assets of Shanghai Maling and the broader Bright Food Group in China, we will have a unique opportunity to build establish Silver Fern Farms as the premium red meat brand in what is the world’s fastest growing protein market.
“The new Partnership will allow us to invest in the things we want to, not just the things we need to, which has been the position in recent times. The investment will see Silver Fern Farms have no debt and a positive cash position at next year end.
“Shareholders clearly understand, and appreciate, the magnitude of the opportunity in front of us. Growth in our ‘Plate to Pasture’ strategy will generate higher returns over time for shareholders and suppliers into these programmes. With higher returns and lower debt we expect to be able to share profits via regular payments of dividends to the two shareholders and maintain competitive procurement prices for our livestock suppliers.
“The Co-operative will receive 50% of those future dividends and intends, subject to the Co-operative Board approval at the time, to in turn provide regular payments of dividends and rebates to shareholders,” said Mr Hewett.
Dean Hamilton, Chief Executive, Silver Fern Farms said Shanghai Maling brings more than just capital because they provide the company with a huge opportunity in China.
“Shanghai Maling’s integrated supply chain model will allow us to advance our product development and consumer marketing abilities in China in ways we could not do ourselves, or with any other local or international investor.
“This is a genuine game changing opportunity for our business, and I’m delighted the Co-operative shareholders are excited about the opportunity. We have a partner who supports and wants to accelerate our global strategy. Shanghai Maling has the resources and relationships to help us specifically in China, and will invest significant capital to put us in a position of not only financial sustainability, but one of strength. The end result should be higher, and more stable, returns from the plate to the pasture,” he said.
The next steps involve:
- Shanghai Maling shareholders approving the partnership on Monday 30 October. Bright Food Group (38% shareholder in Shanghai Maling has already stated it will vote in favour).
- Obtaining regulatory approvals from both New Zealand and Chinese authorities. This process is expected to take several months.
- Transaction expected to come into effect between March and June 2016.
A separate resolution, led by Messrs Richardson and Cochrane, which sought shareholder support to require the board to undertake and provide an analysis of a merger with Alliance Group, was voted down by 76.01% of shares cast.