New Dairy Group chief revives mega-merger support

By PHILIPPA STEVENSON

New Zealand Dairy Group has taken only a week to replace its dumped chief executive, appointing company financial manager John Spencer.

Mr Spencer, a leading contender for the hot seat last time round, has controlled the $3.5 billion company's finances for seven years.

He replaces his former boss, Graeme Milne, who left the company last week after 15 months.

The company blamed differences between its board and Mr Milne over strategy implementation for the abrupt departure.

Yesterday, Mr Spencer said that despite missing out on the job last time, he would not have been interested again if the board had not reduced from the "absolutely unwieldy" 17 directors to 12 after this month's annual meeting.

"It was a key issue for me," he said.

And he predicts that the new board will be "great to work with" and will start achieving.

Mr Spencer was acting chief executive after Mr Milne's predecessor, Pryme Footner, left the company, and industry commentators picked he was in for another caretaker role.

A growing sense of purpose among leading industry members to bring about the integration of the big manufacturing companies Dairy Group and Kiwi Dairies with the marketing Dairy Board was likely to mean his job would not exist long term, they said.

The possibility of a short tenure did not faze Mr Spencer, who said he would happily work himself out of a job pushing for "essential" industry integration.

"I certainly would not have a problem with it at all. It is the outcome that is important, not who survives and who doesn't. The people who have their money at stake are the 14,500 dairy farmers, not a few precious executives."

Mr Spencer, who will now be a principal participant in negotiations with Kiwi and the Dairy Board, has already been at the forefront of planning for the mega co-op, writing a large part of its business plan.

He said that while the status quo had to go and he favoured replacing it with the mega co-op, there was no right way to restructure.

The industry was possibly the country's best and could not afford to make a wrong move.

"The consequences would be serious. That is why it needs not just the industry coming together. It needs co-operation with the Government and Government agencies to get it right. It is what is economically sensible [that is important]. You can't get hung up with philosophy.

"If the terms for entry for MergeCo for any of us are unacceptable - not the valuations between Kiwi and Dairy Group, but such things as the constraints the Commerce Commission might put on it - then we couldn't go down that path. There is no point in having MergeCo then finding we have an industry that is economically unsustainable."

The Institute of Chartered Accountants director and former Progressive Enterprises chief financial officer said he found the co-operative industry "a different animal to deal with" when he joined it seven years ago, but had come to respect it.

It would be "incredibly criminal" to get rid of the co-operative philosophy, and plans for integration needed to bear that in mind.