Sealord, Sanford talks called off

By IRENE CHAPPLE

Talk of a marriage between fishing companies Sanford and Sealord was canned yesterday but both still want the industry streamlined to better compete in the global market.

Both companies expressed regret the merger talks had collapsed but were silent on why the nuptials were called off.

It is understood Sanford - which was initially approached by Sealord for talks - walked away after dissatisfaction over valuations and the levels of shareholdings in a merged entity.

Neither company would give details. The chief executive of Nelson-based Sealord, Doug McKay: "There is not a lot I want to say or can say. The board couldn't get satisfactory negotiations on some issues ... there were a few things that couldn't be resolved."

McKay - who later said he could not comment because of a confidentiality agreement - said the breakdown was because of "board issues not operational issues".

The chief executive of Auckland-based Sanford, Eric Barratt: "I'm not going to go into the issues that were not able to be resolved."

A merged entity would have had diverse interests to juggle.

Sanford is New Zealand's only listed fishing company, a large chunk of which is owned by the millionaire Goodfellow family.

Sealord is owned equally by Japanese company Nissui and Te Ohu Kai Moana, charged with protecting the assets of the Maori fisheries settlements of the late 80s and early 90s.

Pacific Marine Farms, a smaller company which was part of the merger talks, is owned by Te Ohu Kai Moana.

The level of foreign ownership - a 25 per cent Nissui stake was being discussed - is understood to have been a problem for Sanford.

Analysts had been enthusiastic about merger talks and the two companies were seen as virtual equals.

Sealord's sales revenue of $500 million to $650 million is more than Sanford's $367.7 million. But Sanford is debt-free compared with Sealord's substantial debt burdens.

The talks took place in the shadow of extremely difficult market conditions in which profits, eroded by the high dollar, are being protected by hedging contracts.

Streamlining the industry - through rationalisation or other means - is seen as vital for survival in the global marketplace, where it exports more than 90 per cent of its product.

But on Thursday talks between the industry's two biggest players collapsed and, after the parties mulled it overnight, Sanford released a statement to the market yesterday saying it was no longer having talks.

McKay said rationalisation was still "very much" on the agenda. "The industry is not as well organised as some other industries that export. Fishing is 10 years behind."

While the deal with Sealord was off, "in the process of looking at what the companies looked like together there are opportunities we can still go after without merging".

McKay said such options included co-operating with market development or asset sharing.

Barratt was looking at "ways forward" which he said included expanding outside New Zealand or buying quota assets.