Dawn Meats may buy 65% of Alliance Group for $250 million

Dawn Meats may take a 65% stake in farmer-owned co-operative Alliance Group. Photo / Supplied

Meat processor Alliance Group says Europe’s Dawn Meats may pay $250 million for a 65% stake in the meat processor if its farmer owners approve the transaction.

Ireland-based Dawn Meats is one of Europe’s leading red meat processors.

Alliance, a farmer-owned co-operative and New Zealand’s biggest sheep meat exporter, said the deal would give it an enterprise value of $502m.

The deal is subject to shareholder acceptances, High Court and regulatory approvals.

Proceeds from the transaction would be used to reduce Alliance’s short-term working capital facility by about $200m, accelerate the board’s capital expenditure programme and enable the distribution of up to $40m to the co-operative.

The announcement comes after a two-year process to reset and recapitalise Alliance Group’s business.

Chairman Mark Wynne said Alliance was built by farmers for farmers and had a proud co-operative legacy.

“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.”

Wynne said the Dawn Meats proposal would secure and strengthen Alliance’s future.

“With Dawn Meats’ balance sheet power, strength in beef and market access across the United Kingdom and Europe, and Alliance’s strength in lamb and market access across China, wider Asia 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 and generated a compelling offer, which the board has unanimously endorsed.

The transaction is to be implemented via a scheme of arrangement and will require a minimum of 75% shareholder acceptance of those who vote, and greater than 50% of all shareholders voting “yes” at a special general meeting in Invercargill in mid-October.

If shareholders do not support the proposed investment, the Alliance board would be obligated to enter into a process led by its banking syndicate, which may involve possible asset sales, site closures and further cost-reduction initiatives, the board said.

Dawn Meats has a successful operating and investment track record in Ireland, the UK and the European Union, Dawn Meats CEO Niall Browne said.

“Having the ability to grow in partnership with some of New Zealand’s leading farmers and create year-round supply for our customers between the Northern and Southern Hemispheres is an opportunity we are deeply committed to and take very seriously,” he said.

Dawn Meats is a family-owned business established by three farming families in Waterford, Ireland, in 1980.

It has 24 facilities and more than 8000 employees in 10 countries, processing more than 3.5 million sheep and 1 million cattle per annum, with a core annual turnover of more than $5.8 billion.

Dawn Meats has a stable of strong and well-recognised brands, including operating the Dunbia brand in the UK, Browne said.

The company serves major retailers, manufacturers and food service operators in more than 50 countries.

Last year, Allliance reported an after-tax loss of $95.8m for the 12 months to September 30, compared to a loss of $70m in the year prior.

Turnover slipped to $1.8b from $2b in 2023.

The result reflected the tough global trading conditions, especially for lamb.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.