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Home / Bay of Plenty Times / Business

Investors consider kiwifruit merger

Bay of Plenty Times
28 Nov, 2011 10:07 PM4 mins to read

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The Satara board has until Friday to convince shareholders to approve a merger with rival kiwifruit post-harvest company Seeka but their approval is by no means assured.

While the plans to merge the co-operative Satara with the corporate Seeka has the full endorsement of both boards, Satara shareholders appear divided as to whether the deal is in the best interests of their company.

Friday's meeting will require 75 per cent of Satara's transaction and investor shareholders to vote in favour of the proposal while, because of its corporate structure, consent is not required from Seeka shareholders.

Satara chairman Hendrik Pieters said feelings among the co-operative's owners were mixed.

"The feeling is that the issue has come out of blue for shareholders and there are reasons for that, including Satrara's listing on the Stock Exchange and the confidentiality process to go through."

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However, the board had been reassessing its situation in light of impacts on orchards and crop volumes of the disease Psa-V for at least 12 months, he said.

While Satara may not have considered the proposal if Psa had not affected the industry, Mr Pieters said the disease had changed the post-harvest environment dramatically.

Seeka CEO Michael Franks described the proposal as offering a safe harbour for both companies.

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"What it would do is combine to create a big entity able to withstand the storm ahead," he said.

"Alone, both companies face some uncertainty in future but the boards have convinced themselves there is a safer and more secure future if we combine. We will be setting up a new amalgamated company to emerge on the other side of Psa," Mr Franks said.

Shareholders were informed of the proposal on November 11 and meetings have been held in Bay of Plenty, Waikato and Northland to outline the proposal with the final decision to be made at a special meeting on December 2.

Mr Franks said due diligence had been done and the boards had assured themselves of the state of both companies.

"The bankers have given a term commitment to the new entity which is important and gives us quite a bit of security."

Tauranga grower Vern Pain is not in favour of the proposal.

"The two companies are culturally different. Satara is a co-operative and Seeka a corporate," said Mr Pain who has been in the industry for 30 years. He was chairman of the former co-operative KatiPak, which merged with Bay of Plenty Fruit Packers to become Satara.

He does not believe the offer of one Seeka share for every 3.14 Satara shares, in effect valuing Satara shares at around 30 cents, is enough.

"I believe before Satara accepts the first offer put to it, it should see if there are better offers out there.

"Make no mistake this company does not need to be sold. It has loyal shareholders and could survive much better than many others."

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Mr Pain holds those views even though he has orchards infected with the vine killing disease Psa-V.

Te Puke grower Jenny Natusch, whose gold orchards are also infected, believes the amalgamation should go ahead.

"For the next three to five years it will be a matter of survival for most businesses involved in the industry and the merger with Satara and Seeka will give both a strong position."

Mrs Natusch said if the merger didn't go ahead neither company would be able to give growers the services and support they needed to get through Psa.

Growers outside the Te Puke area had yet to face the full impact of Psa and some were more hopeful about the future than those in Te Puke but the reality was that answers to managing the disease were unlikely to be found in the short term, she said.

Neil Magnus, Satara shareholder of Katikati, doesn't favour the merger.

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"Satara is in a strong position with its balance sheets and the value of its assets. It owns good industrial land in Katikati and Te Puke which could be sold to pay off debt."

Mr Magnus believes Satara's debt situation is better than Seeka's. He would rather Satara formed an alliance with fellow co-op East Pack as proposed last year but which failed to eventuate.

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