Dawn Meats to acquire 65% stake in New Zealand processor

Proposed partnership would see Dawn Meats invest €127.8m to acquire a stake in the Alliance Group, a farmer-owner cooperative which is New Zealand's largest processor and exporter of sheep meat and a key producer of grass-fed beef

The Alliance Group is owned by about 4,300 shareholders. The company operates six processing plants in New Zealand.

Waterford's Dawn Meats has been selected by the board of a New Zealand meat producer to acquire a 65% stake.

The proposed partnership, which is subject to shareholder approval, would see Dawn Meats invest NZ$250m (€127.8m) to acquire a stake in the Alliance Group, a farmer-owner cooperative which is New Zealand's largest processor and exporter of sheep meat and a key producer of grass-fed beef.

Farmer-shareholders were informed of their board’s preferred and unanimously recommended option on Monday. In addition to shareholder acceptances, the transaction is also subject to New Zealand High Court and regulatory approvals.

If approved, proceeds from the proposed transaction would be used to reduce Alliance Group’s short-term working capital facility by NZ$200m (€102.3m), accelerate the board’s strategic capital expenditure programme and enable the distribution of up to NZ$40m (€20.5m) to the Alliance co-operative, subject to shareholder livestock supply.

"As the largest retail packer of New Zealand lamb in the UK, Dawn Meats is familiar with the high standards of the country’s grass-fed meat industry and its produce," Niall Browne, chief executive of Dawn Meats said. 

We have worked closely with Alliance for many years in this regard, and we greatly admire the exceptional quality of their world-class grass-fed lamb, beef and venison.

“Our ‘can do’, keep-it-simple and commonsense culture aligns naturally with Alliance. The opportunity here is to create a dynamic industry competitor with a unique combination of customer relationships, resources, skills, routes to market and industry knowledge that will give us a powerful competitive edge, both locally and globally.”

The deal will require a minimum of 75% shareholder acceptance of those who vote, and greater than 50% of all shareholding voting yes at a special general meeting to be held in Invercargill in New Zealand in mid-October. 

The Alliance board said failure to accept the investment from Dawn Meats would mean the co-op would be obligated to enter into a process led by its banking syndicate, which may involve possible asset sales, further site closures and further cost-reduction initiatives.

The Alliance Group is owned by about 4,300 shareholders and the company operates six processing plants in New Zealand.

Mark Wynne, Alliance Group chair, said the announcement comes after a two-year process to reset and recapitalise Alliance. 

"The process we have undertaken on behalf of our farmer-shareholders to meet our banks’ requirements means we are now a much fitter and stronger business. However, we need this investment to provide certainty and confidence and ultimately unlock more value for our farmers.

“With Dawn Meats’ balance sheet power, strength in beef and market access across the UK and Europe, and Alliance’s strength in lamb and market access across Asia, China and North America, there are significant commercial and operational synergies at stake — with potential for our shareholders to see the value of their residual 35% stake grow over the long term," he said.

“The recapitalisation process explored several options in the interests of our shareholders and has successfully generated a very compelling offer, which the board has unanimously endorsed. We encourage all shareholders to attend the upcoming information sessions and vote to accept the offer," Mr Wynne said.