By PHILIPPA STEVENSON and NZPA
Fonterra's bid for independent dairy cooperative Westland Milk Products appears to have backfired.
Fonterra director Harry Bayliss chartered a plane to attend a Westport farmer meeting on Tuesday night, but his visit appears only to have united shareholders against the proposed merger.
Westland chairman Ian Robb said
Fonterra had done the company a favour by firming farmer resolve.
A cash sweetener, not just the one-for-one exchange of shares offered, would probably have tempted a few shareholders, he said.
Westland's turnover last year was $211 million on assets of $112 million and equity of $67 million. It paid its suppliers $5.20 a kilogram of milksolids, 20c more than Fonterra merger partners New Zealand Dairy Group and Kiwi Dairies.
Mr Robb declined to say what value Fonterra had put on the company or to give his own estimate.
That would only fuel speculation the company was out for offers, he said.
Fonterra has set a preliminary estimate of the fair value of its own shares at $3.85, giving the company an equity level of $5.4 billion, when shareholders' investments in peak notes are taken into account.
Peak notes are a capital instrument to cover fluctuating supply at the height of the season, when expensive processing space is at a premium
Buller farmer John Reedy, who organised Tuesday night's meeting attended by around 50 farmers, said it was very informative "but I don't think anyone's changed their mind about standing alone".
"Fonterra's representative couldn't answer the hard questions," said Mr Reedy, who was nevertheless grateful for Mr Bayliss' flying visit.
A vote next Wednesday would reject the bid unless Fonterra came back with a cash offer, he said.
In May, 95 per cent of Westland's 335 shareholders voted to remain independent of Fonterra, which has around 14,000 shareholders.
Westland deputy chairman Ross Scarlett believed Fonterra's next target would be fellow independent company Tatua.
The chairman of the Waikato company, Dr Alan Frampton, agreed he had expected another overture.
But, he said, the lead industry payer's course into valuable high-tech products had been set for around six years and was not about to be altered.
