By Philippa Stevenson
Kiwi and Northland dairy companies have signalled more turbulence for the plan to put together an industry mega co-op - by announcing two-way merger discussions.
The proposal to merge up to eight manufacturing companies with the exporting Dairy Board was sent back to the drawing board last month when
it was provisionally rejected by the Commerce Commission.
While the industry has been preparing a new application to go to the commission in November, talks have continued among Dairy Group (58 per cent of the industry), Kiwi (27 per cent) and Northland (9 per cent) for a lynchpin merger.
Yesterday, to the surprise of Dairy Group, its smaller compatriots moved to strengthen their negotiating position by combining forces.
Kiwi chief executive Craig Norgate denied the ploy was to gain bargaining clout, saying it was "pretty extreme to match with a company the size of Northland to do that."
But he conceded that "yes, Dairy Group probably would have preferred to pick us off one by one."
The Commerce Commission had created delays and uncertainty "so this actually takes a good step forward towards the mega co-op, and protects the interests of Kiwi and Northland shareholders along the way," he said.
Dairy Group chairman Doug Leeder questioned the timing of merger talks between Kiwi and Northland, saying they could prove a distraction to advancing the mega co-op.
