Two Farmlands directors have resigned in an attempt to derail a $2 billion deal to merge the Hawke's Bay-based farm-supply co-operative with a similar South Island organisation, CRT.
Former Federated farmers president Charlie Pedersen and Farmlands Hawke's Bay representative Hugh Ritchie said in a statement that Farmlands members would not be getting all the information before voting on the issue.
"Members need to be aware of some very serious issues in the documentation before they vote and we strongly urge all members to carefully read and question the detail in the proposed merger documents before voting," they said.
"Despite raising our concerns and asking for more information around the merger and process we have been left with no choice but to resign, so we can speak out."
The business case for the merger was short in detail and deferred expenditure was needed to create a $38 million benefit to shareholders from the merger.
Farmlands chairman Lachie Johnstone said the pair were displaying "a degree of naivety".
"The deferred expenditure makes up about $6 million of the $38 million - $32 million is still a significant amount of money," he said.
The board had tried to address the concerns of Mr Pedersen and Mr Ritchie "at considerable expense to shareholders" over the last two months, meeting with them in Hawke's Bay yesterday, shortly before the pair released their statement.
The board had voted unanimously to take the merger proposal to members subject to changes in wording demanded by the pair, he said.
"We responded accordingly, but clearly that was not enough."
He said it appeared the dissenting directors had a personal agenda.
"Charlie wasn't selected by his peers to go into representing Farmlands in the new entity and Hugh's family situation creates a dilemma - his family came out publicly against the merger before we had presented any relevant information. Given that they operate a large successful family farming business it must be challenging to have two people with opposing views, when they are both passionate people."
Mr Ritchie's father David is a former chairman of Farmlands.
"Both Hugh and Charlie have political backgrounds," Mr Johnstone said.
"I don't know about Charlie but this is Hugh's first commercial-governance role. The rest of us have been around for a fair while."
He said board members recommending the merger had extensive experience, including a bank chairman and a Landcorp director.
"We have people with experience long and deep. None of them is concerned about the process to date and these two, because they feel they have not been listened to, feel aggrieved. It is problematic."
Farmlands members would be fully informed, he said.
"The board thinks there is enough value in the transaction to present it to shareholders and let them have their say. The only thing we are trying to do is set Farmlands up for the future."