Shareholders of post harvest kiwifruit operators EastPack and Satara are being asked to approve a merger of the companies following the signing of a merger implementation agreement today.
Chairmen Ray Sharp and Hendrik Pieters said that the two companies are obvious merger partners. "Their respective strengths and the benefits that will follow from the proposed merger will provide a much stronger platform to deal with the challenges that the industry is now facing, particularly Psa," they said.
The proposed merger would create the largest kiwifruit packing and coolstore operation in New Zealand.
"The main reasons for the merger include creating an enlarged co-operative that is owned by growers. The merged company will be totally focussed on grower owners' needs and in a better position to meet their expectations for quality processing, higher orchard gate returns, low packing prices and improved return on investment. We will be creating a business of improved scale utilising the best people, assets and technology from both companies. There will also be various cost-saving synergies from improved facility utilisation, particularly the ability to pack through the most efficient sites," Messrs Sharp and Pieters said.
Under the merger, Satara grower shareholders will receive one EastPack Transactor share for each dollar paid-up on their Satara Transactor shares, one EastPack Investor share for each Satara Investor share held, a five cent fully imputed special dividend for each Investor Share held and an opportunity to purchase additional EastPack Investor shares at 65 cents a share.
Satara's non-grower investors (and grower investor shareholders holding excess investor shares) will be offered 60 cents per investor share plus the five cents dividend. The companies' chairmen said that this would provide an opportunity for non-grower investors to exit their investment in Satara at a fair price (and a substantial premium relative to the last traded price for such shares), considering the current prospects for the kiwifruit post harvest industry.
"Growers are working hard to survive in an environment with a high New Zealand dollar and high Psa related growing costs. We believe that by combining resources, we can reduce costs and operate more efficiently for the benefit of the growers," Messrs Sharp and Pieters said.
They said that the merged company would also have the financial strength to enable it to quickly upscale with modern, efficient capacity if kiwifruit volumes recover and grow in the future.
Shareholders will be sent merger information packs, including a chairmen's letter, the investment statement and amalgamation proposal for the upcoming shareholder meetings, which will take place in late February. If approved by shareholders, the merger will become effective in March in time for the 2013 packing season.