Westland shareholders strongly back Yili takeover
By Rebecca Howard
July 4 (BusinessDesk) - Westland Co-Operative Dairy Company shareholders overwhelmingly supported a takeover bid by Hongkong Jingang Trade Holding, a unit of Inner Mongolia Yili Industrial Group Co.
Of 2,775 votes available able for voting today, there were 2,484 favour, 165 against and 10 abstentions. More than 96 percent voted. Of the total votes able to be cast, 90 percent were in favour. In order to pass, 75 percent needed to vote and of those, 50 percent had to back the plan.
Chairman Pete Morrison said shareholders had shown strong support for the proposal that is worth $588 million, including debt and liabilities.
“When the board initiated the strategic review process, we did so with the full understanding that all Westland farming families needed to have a competitive milk payout. We know this has been, and is, a driving need for all shareholders.
“This proposed transaction will secure a competitive milk payout for at least 10 seasons for all of our existing shareholders and ensures that all of our existing shareholders’ milk would be picked up for 10 years," he said.
He noted the offer of $3.41 per share is above the independent adviser’s valuation range of 88 cents to $1.38 and the milk supply commitment ensures a minimum price for 10 seasons at least matching the Fonterra farmgate milk price.
According to ANZ Bank, in the past three season’s Westland’s milk price has trailed Fonterra’s by an average of approximately 75 cents per kilogram of milk solids. If Westland had been able to match Fonterra during the past three seasons, dairy farmers would have received an extra $140 million over that time.
ANZ Bank has estimated Westland suppliers will bank - on average - $572,000 from the sale.
“The board recognises that the vote today is an important milestone in Westland’s history. While Westland will cease to be a co-operative, the board believes the proposed transaction represents the best available outcome for shareholders,” Morrison said.
The deal remains conditional on certain conditions, including obtaining regulatory consent from the Overseas Investment Office and receiving approval from the High Court. The final court hearing is scheduled for July 18.