New Zealand: mega merger under way

On December 21, the Chairmen of New Zealand’s two large dairy companies, New Zealand Dairy Group and Kiwi, announced that they intended to merge in a mega deal which also includes the export sales organisation New Zealand Dairy Board. The move will create a real dairy giant combining a production and sales organisation. Until now, New Zealand dairies have been concerned with production only, while exports, including Anchor butter to the UK, have come under the New Zealand Dairy Board. The new company, to be known as GlobalCo, will handle around 98 per cent of New Zealand’s total milk production of approx. 10.8 billion kg and will thus take over Arla Foods’ position as the world’s third largest dairy company. Around 95 per cent of New Zealand’s milk production is exported.

The merger proposal will be formally submitted in March after which a quorum of 75 per cent of the two companies’ 14,500 milk producers must vote in favour before the merger can take effect, as planned, on June 1. The merger must also be approved by the authorities.
The merger means savings and synergies worth over DKK 1 billion per year and paves the way for investments in foreign dairy companies, according to NZDG’s Deputy Chairman John Roadley, who is likely to become chairman of GlobalCo. The company’s long-term objective is to increase the value of dairy exports and earnings from subsidiaries abroad from a current DKK 32 billion to DKK 140 billion in 2010.