By PHILIPPA STEVENSON agricultural editor
Dairy Board directors have approved a deal which could lead to the board taking a quarter stake in Australian company Bonlac Foods.
The transtasman alliance, which would create a consumer and food service company with a $680 million turnover, now needs the go-ahead from Bonlac's 2500 farmer
shareholders.
It also depends on agreement with the small Bega cooperative that licenses Bonlac's use of the Bega cheese brand.
The Bonlac board approved the deal last week but commentators here say that despite months of due diligence the Dairy Board's blessing will depend on the state of negotiations between New Zealand Dairy Group and Kiwi Dairies on industry restructuring.
Representatives of the two manufacturing companies make up most of the Dairy Board directors and they were thought not to want to commit themselves to big deals while undecided on the proposed mega co-op, or other structures for the industry.
Board chairman Graham Fraser was tightlipped about the structural debate yesterday.
The board discussed the issue on Friday but he would say only that the outcome was positive.
"But I must say I am very pleased the board has decided to proceed with the Australian amalgamation, which is supportive of our direction."
Mr Fraser was optimistic that Bonlac farmers would take the deal with the board because both companies had accepted it as a good proposal and a sensible business decision.
"Provided we put adequate information in front of the shareholders, one would expect them to reach the same conclusion."
The alliance heralded a new era in transtasman dairy relationships, Mr Fraser said.
"It's a very good deal for both parties.
"It will merge Bonlac's international ingredient marketing operations with those of the board and create a joint consumer marketing organisation with some of Australia's leading dairy brands in its stable, including the number-one brands in cheese and dairy spreads."
There would be immediate operating synergies and attractive long-term strategic advantages. Planning was well advanced and the combined operations could be working soon.
"We want to really push the button on day one in early February."
