Move to force pace on merger

By Philippa Stevenson

New Zealand Dairy Group has made a long-awaited breakthrough in the four-year-old plan to set up a dairy industry mega co-op.

Dairy Group chairman Henry Van Der Heyden said last night that his company would table its merger position to potential partner Kiwi Dairies at a meeting tomorrow.

"Due diligence has been under way since May," he said.

"It's dragged on far too long. We have got to know whether [the merger] is on or off, so it's time to put our position on the table."

Mr Van Der Heyden, chairman for just three weeks since the shock resignation of Doug Leeder, said Dairy Group would lay out its calculations of the two companies' valuations.

It hoped to confirm a deal with Kiwi in time to put "skeleton" merger terms to farmers before Christmas.

"The merger has always been about a commercial deal between Dairy Group and Kiwi," said Mr Van Der Heyden, who last week indicated to Kiwi chairman John Young that the move was imminent.

Mr Young said his company was still seeking information from Dairy Group and did not feel under pressure to respond to the other company's action.

"That's as they see it. We're still yet to formulate our assessment.

"With all the changes at the top [of Dairy Group], it has been difficult for them to keep up with the information we need," he said.

Mr Young said Kiwi had long been critical of the pace of merger talks but had lived with it.

"It has not been easy for Dairy Group. There was a period without a chief executive, changes at the top and executives leaving.

"We have just hoped it didn't take too long."

Serious negotiations would start once both companies had completed valuations, Mr Young said.

The breakthrough, which was welcomed by farmers and the mega co-op establishment board, came after Dairy Board chairman Graham Fraser urged the companies to speed up in the face of a tight deadline of June 1 next year.

He said on Monday that the key merger between the country's biggest dairy companies was holding back the mega co-op plans, which also require Commerce Commission approval and 75 per cent shareholder support.

Yesterday, Mr Fraser - who has been in the job only a month - said he hoped his urging had helped bring about Dairy Group's action.

"I've been shouting," he said. "It's pretty hard. It's causing friction. When you push people they push back."