By LIBBY MIDDLEBROOK
Kiwi Co-operative Dairies is likely to beef up its share of the national milk market this year through a merger with a South Island dairy company.
The second-largest milk producer, Kiwi has agreed to enter into due diligence with Tasman Milk Products, a Golden Bay-based cooperative with 220 suppliers
and a 1.5 per cent share of national milk production.
If approved by shareholders, the deal will give Kiwi almost 38 per cent of national milk production.
Kiwi's chief executive, Craig Norgate, said: "For a company like Tasman, shareholders are better off as part of a large organisation."
Kiwi has been fighting to gain more control of the industry since merging with Northland Cooperative Dairies last year. Hamilton-based New Zealand Dairy Group is the dominant milk producer, with 58 per cent of production.
Tasman's general manager, Yurgen Shasfer, said Kiwi was the company's preferred partner, offering business synergies in areas such as speciality protein products. The merger would also give the company more security.
Due diligence is expected to take about two weeks and if approved by shareholders, the merger will be backdated to June 1.
Details such as annual payout differentials have not been considered. Tasman's 1999 payout per kg of milksolids was about 20c behind Kiwi's $3.62.
