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Waitotara Directors Recommend Merger With Richmond

Directors of Wanganui-based Waitotara Meat Company are recommending a merger with major North Island meat industry player Richmond Limited.

The merger is being recommended as beneficial to shareholders and suppliers of both companies. It involves an exchange for 1.5 Waitotara shares for each share in Richmond, and the payment of a fully imputed dividend of 20 cents per share prior to their merger.

Waitotara was formed in 1987, with a new plant at Waitotara producing an enviable financial performance, particularly from 1991 to 1996, when shareholders and suppliers enjoyed returns well above the New Zealand sheep industry average.

Waitotara chairman and founder, Rod Pearce, said his company had performed well this season following a disappointing previous two years because of falling stock numbers combined with pricing difficulties in overseas markets.

"Productivity and quality from our two plants has been excellent, our central office in Wanganui has developed into a first class business unit and the establishment of our brand in the market has been a great success story," he said.

"But we still have not been able to maximise profits over the last three seasons due to industry pressure for livestock and seasonal finance. This means we have had barriers to making gains on several fronts, including product development, downstream processing and direct market sales.

The opportunity to merge with Richmond will solve these problems while unlocking the potential to move to a higher general level of performance for both companies.

"We welcome this merger as a very significant means to increase the value of shares in Waitotara, while at the same time enhancing the strategic position and value of both companies."

The move will give Richmond, already the dominant East Coast and lower North Island lamb processor, a strong presence in the central and western regions as well as in the Waikato. Mr Pearce said merging of the two companies' production, particularly fresh and further processed foods, would be of considerable advantage in the world marketplace.

ENDS....

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