By PHILIPPA STEVENSON, agriculture editor
Fonterra will be putting a $7 million cheque in the mail to its small dairy industry cousins, Tatua and Westland, after a revaluation of their former Dairy Board marketing arm.
Under the industry restructuring that led to Fonterra's formation, Macquarie Bank, appointed by the Minister of Agriculture,
valued the board's 988 million shares at $3.5 billion, $3.51 a share.
The three companies disputed the figure and went to arbitration.
The arbitration panel has upped the board's value to $3.73 a share, an increase of more than $200 million - to $3.7 billion.
Tatua, which held just under 1 per cent of the board, is in line for a $1.7 million top-up to the $28 million it received, and Westland, with around 3 per cent of shares, will see its payout boosted $5.4 million to over $100 million.
The Business Herald understands arbitration costs and an allocation formula have yet to be calculated, but could reduce the amount the companies get.
Fonterra chairman Henry van der Heyden said he was pleased with the outcome, particularly because it represented the final stage of industry restructuring and allowed the industry to move on. The decision would not affect Fonterra's payout for this season.
Sources said the arbitration result would not effect Fonterra's share value, calculated from a valuation by Standard and Poor's.
Westland chairman Ian Robb said his company accepted the decision. Tatua chairman Dr Alan Frampton said it would allow the companies to move on.
Frampton said last year if the assets were undervalued, wealth would be transferred from the previous shareholders of Kiwi, New Zealand Dairy Group, Tatua and Westland to future Fonterra shareholders. If the price was put too high, today's shareholders would be advantaged over future shareholders.
