Dairy Merger Fact Sheet

Merger of New Zealand Dairy Group and Kiwi Co-operative Dairies

The Merger Package agreed between the New Zealand Dairy Group and Kiwi Co-operative Dairies Ltd involves:
 The merger of the New Zealand Dairy Group and Kiwi Co-operative Dairies and the integration of the New Zealand Dairy Board to form a new company, with an interim working name of Global Dairy Company.

 The removal of the New Zealand Dairy Board's export monopoly.

 Agreement on a structure for Global Dairy Company that will ensure it remains owned and controlled by New Zealand farmers.

 Reaffirmation and strengthening of the co-operative principles on which the industry was founded.

 Agreement that the Global Dairy Company board will consist of 13 members, 10 of whom will be dairy farmers elected by farmer shareholders.

 Establishing a structure that will promote the value of brands and marketing infrastructure currently owned by the New Zealand Dairy Board.

 Preservation of the industry's intellectual property.

 Protection of quota rents from international market access arrangements.

 Transitional arrangements to ensure no disruption to export marketing operations.

 Promoting greater competition in the domestic market by selling the Dairy Group's 50 percent shareholding in New Zealand Dairy Foods Ltd.

 Provisions to ensure fair, non-discriminatory behaviour by Global Dairy Company towards its suppliers.

 A mechanism that allows farmers to exit Global Dairy Company and, in doing so, access their fair value of their investment in the industry.

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Subject to the companies being confident of Government support for the necessary legislative and regulatory changes, a formal Amalgamation Proposal will be put to shareholders in March 2001 and a vote held at the end of that month. Approval is required from 75 percent of the shareholders of each company for the merger to proceed. This timeframe allows implementation to occur on 1 June 2001, in time for the 2001/2 season.

The merged company would be the 14th largest dairy company in the world and New Zealand's only company of global scale, operating in more than 120 countries and territories around the world. It would have total assets of approximately $7.5 billion, and have a 35 percent share of world dairy trade. It would be responsible for more than 20 percent of New Zealand's exports and nearly seven percent of its GDP. It would be 100 percent owned by New Zealand dairy farmers.

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