Westland Milk Products farmer-shareholders voted overwhelming in the past week to accept the $558m takeover bid by Chinese giant Yili for the co-op’s milk processing operation.
For individual farmer shareholders, the bid means an injection of around $500,000 each into their bank accounts, plus better returns for their milk over the next 10 years.
No wonder 94% of the 96% eligible shareholders cast their votes in favour. West Coast farmer and Federated Farmer president Katie Milne, who is also a WMP director, said it was an “absolutely stunning” result for West Coast farmers.
Yet the sale is lamented by many local leaders, as well as by NZ First whose spokesman Mark Patterson wailed about an “alarming trend”. Continue reading “Yili’s gain on the West Coast brings a $500,000 windfall to farmers – but local leaders lament sale to foreigners”
Is Westland Milk one of NZ’s “key strategic assets”?
NZ First is adamant it is and believes the government should be a applying a “national interest test” to the proposed sale of the company to the Chinese dairy giant Yili.
Those who see heavily indebted companies like Westland Milk struggling to make a profit and not even matching Fonterra’s payout to its suppliers might take a cooler view to the proposed sale.
Federated Farmers dairy chairman Chris Lewis said he had received “mixed” feedback from West Coast farmers on the deal, which will require 75% approval. Continue reading “NZ First is not alone in worrying at the implications of a Westland Milk sale to Yili”
On the face of it, it’s a no-brainer. Weighed down with debt, Westland Milk, based in Hokitika is financially on its knees. Riding to its rescue, Chinese dairy giant Yili has come in with a $588m buyout deal which will yield $3.41 a share to the co-op’s farmer shareholders, and, as well, absorb Westland’s debt and liabilities.
According to Westland, the nominal value of its shares has ranged from 70c to $1.50 per share. For the average-sized Westland farm, the share offer translates to about half a million dollars cash.
The offer looks even more attractive since Westland had to cut its milk payout forecast, while other companies’ forecasts are rising. Westland, which has grown out of the West Coast’s 150-year dairy heritage, hasn’t paid a competitive milk price for several years.
The conditional deal comes with extra sweeteners. Yili has committed to collect all milk supply. It will also pay a competitive price of at least as much as the Fonterra farmgate milk price for 10 years.
But why would Yili go that distance? Continue reading “Yili bid for Westland Milk raises questions about dairy co-operatives – and Fonterra’s ownership”
Encouraging signs emerged this week that key elements in the structure of NZ’s largest export industry are whipping themselves back into the shape they should be.
The giant co-op Fonterra has gone back into the black with a net profit of $80 million in the first half, after previously recording a net loss of $186m.
Meanwhile Westland Milk Products, NZ’s second biggest dairy co-op, is in line to be sold to China’s biggest dairy company, Yili, in a $588m transaction that would inject nearly half a million dollars into the operations of each of its suppliers.
Alongside these co-ops, the Canterbury-based Synlait has underlined its strength in the industry with a solid result in its half-year after achieving higher sales volumes. It reported a half-year net profit of $37.3m, 9.6% lower than the $41.3m in the previous first half, but with the focus on investing for growth, with a second processing plant due to come on stream for the 2019-20 season. Continue reading “Comforting news for dairy farmers as companies report results and the world price rises again”
The contrasting fortunes of Synlait Milk and Westland Milk Products were thrown into sharp relief last week. On the one hand Synlait won applause at its annual meeting from shareholders, impressed by its performance in virtually doubling profit ($74.6m against $39.4m) in its tenth year of operations. On the other hand Westland had the begging bowl out for a Provincial Growth Fund loan of $9.9m which will help the co-op in funding a $22m manufacturing plant aimed at converting milk to higher-value products.
The Westland dairy exporter, discussing a capital restructure in its 2018 annual report, said it had relatively high debt and limited financial flexibility.
Commenting on the PGF loan, chief financial officer Dorian Devers is reported as saying the co-op could have financed the project in other ways “but the terms we have been given from the PGF are more favourable. It’s a longer-term loan than we can get from a bank which is nice”.
The NZ Herald quoted economic consultant and former ANZ Bank chief economist Cameron Bagrie as saying the loan sets a “dangerous precedent”. He reckons it appears to be corporate welfare. Continue reading “A tale of two milk companies – one of them is being suckled by taxpayers”