Disbelief as kiwifruit merger fails

Proponents of a merger deal that would have created the biggest post-harvest kiwifruit operation in New Zealand are shaking their heads in disbelief after missing the required vote.

Shareholders of Bay of Plenty fruit-packing companies Eastpack and Satara were asked to vote on Friday, following a merger proposal that sought greater economies of scale in an industry changed forever by Psa.

The proposal had five resolutions which each had to be approved by at least 75 per cent of the shareholders of both companies.

When counting finished on Friday night, four resolutions had passed easily while one fell short by 0.2 per cent.

Satara chairman Hendrik Pieters said supporters of the merger were stunned.

"The sentiment of the growers that were there was, I guess, disbelief."

However, "it's probably the best worst-case situation you could get. If you look at the result, apart from that small margin, it's overwhelming really so we just have to look at how we make some progress from here".

The boards would keep talking and another vote was possible within the next month or so, Mr Pieters said.

"We're so close, we're having some discussions about [another vote] and once we've got a clearer idea more information will be available."

In an open letter to shareholders published in the Bay of Plenty Times recently, the chairmen said declining kiwifruit volumes and the impact of new varieties would force the post-harvest sector to undertake "a lot of painful adjustments". The answer was to be found in a larger-scale, more efficient company with greater financial resources, the chairmen said.

"Our combined company will be in a much stronger position to deal with the challenges of Psa and the exchange rate that we would be if we stayed separate."

The merger proposal called for Satara to delist from the NZX, pay out non-grower investors, and exchange Satara shares for Eastpack shares. The combined company was to become a wholly-owned subsidiary of Eastpack, packing an expected 27 million trays of kiwifruit this year (around 28 per cent of the total crop).

Mr Pieters said the resolution calling for Satara transactor shares to be converted into Eastpack transactor shares on a dollar-for-dollar basis was the one that had not reached 75 per cent.

The two companies previously thought about merging in 2010. However, the plan was shelved because of the uncertainty created by the outbreak of Psa. In 2011, Satara shareholders strongly rejected a merger proposal with Seeka, another Te Puke based post-harvest kiwifruit operator.