Silver Fern Farms shareholders approve deal to sell 50% stake to Shanghai Maling
By Jonathan Underhill
Oct. 16 (BusinessDesk) - Shareholders of Silver Fern Farms have voted in favour of a proposal to sell 50 percent of New Zealand's biggest meat company to Shanghai Maling Aquarius after the unit of China's state-owned Bright Food Group offered $261 million of cash, a special dividend and money to bankroll the cooperative for seven years.
Some 82.2 percent of votes were cast in favour of the transaction, comfortably exceeding the 50 percent threshold the board had set.
The funds will allow SFF to repay all of its debt and removes a threat from its banking syndicate to withdraw support. As part of the deal, Shanghai Maling will appoint a co-chair of the venture, who will have a casting vote on issues including appointment of the chief executive. Opponents of the sale, which still requires Overseas Investment Office approval, failed to convince SFF's board to consider alternative funding proposals that would keep the cooperative in New Zealand hands, with 76 percent of votes cast against that resolution.
Shanghai Maling's supply chain and parent Bright Food's wholesale and retail networks, offer distribution into China, allowing SFF to ramp up its product development and consumer marketing in a way it couldn't do on its own or with any other investment partner, the company said when the deal was announced last month.
“The new partnership will allow us to invest in the things we want to, not just the things we need to, which has been the position in recent times," said chairman Rob Hewitt. The deal "will provide significant financial capability to accelerate our global ‘Plate to Pasture’ strategy. In addition, with the extensive retail and distribution assets of Shanghai Maling and the broader Bright Food Group in China, we will have a unique opportunity to establish Silver Fern Farms as the premium red meat brand in what is the world’s fastest growing protein market."
Shanghai Maling is one of four Shanghai Stock Exchange-listed subsidiaries of Bright Food, which has expanded rapidly since being founded in 2006 to become China's second-largest food manufacturer. It owns 51 percent of milk processor Synlait through another subsidiary Bright Dairy & Food, and other acquisitions in the past five years include 60 percent of UK cereal maker Weetabix, 75 percent of Australia's Manassen Foods and a majority stake in Italian olive oil maker Salov Group.
SFF says the investment will provide funds to upgrade plants and extend its Plate to Pasture strategy, which has seen the company lift the volume of its meat sold as value-added, chilled meat cuts in foreign supermarkets. SFF's shares were suspended from trading on the Unlisted platform in July, having traded at 35 cents, a fraction of the $2.84-per-share value of Shanghai Maling's proposal. The shares resumed trading on Sept. 16 and were last at $1.30.