By Philippa Stevenson
Merger talks between all nine dairy companies should be under way next week and the mega co-op proposal put before farmers in August.
The two biggest companies, New Zealand Dairy Group and Kiwi Dairies, began negotiations for a merger, which is crucial to the success of a pan-industry company,
in May. The Northland company was brought into the discussions soon after.
Yesterday, Kiwi chief executive Craig Norgate told suppliers at their annual day at the company's Hawera site that all other companies should be involved in talks within 10 days.
"It's anticipated that all negotiations on commercial terms will be completed by late July. During August, the industry will meet with shareholders throughout the country to present the facts and provide the opportunity for them to have their say," he said.
He promised that the expected benefits - estimated to be at least $300 million a year - would end up in farmers' pockets.
Mr Norgate, who has urged the mega co-op's start be backdated to June 1, said at times progress had been frustratingly slow.
"However, we must remember that we are talking about the largest transaction of its kind to ever take place in this country."
Dairy Group chairman Doug Leeder said this week he was open-minded on a commencement date.
"I think it's academic whether you backdate it to June 1, or institute it from a date in the future, say within a month [of agreement]. That's an operational issue which can be dealt with without too much difficulty."
Mr Leeder said Kiwi and Dairy Group were going through valuation and due diligence and within two weeks should "sit down in earnest and try to work through any areas of disagreement."
The mega co-op proposal had to cross four thresholds: agreement between Kiwi and Dairy Group, accommodation or agreement with the Government, Commerce Commission authorisation, and shareholder support.
"If anyone of those four things fall down, then the whole thing is a dead duck," he said.
Mr Norgate told farmers the commission would need to be satisfied there was sufficient competition in the domestic market for milk, cheese and other products, "which will probably involve us selling [Dairy Group's] NZ Dairy Foods or [Kiwi's] Mainland."
