State-owned farmer Pāmu says it voted in favour of selling the troubled dairy co-op Westland Milk Products because continuing with Westland in its current state wasn’t an option.
Pāmu, or Landcorp, the country’s largest farmer, owns 10 farms supplying to Westland and is its second-largest shareholder.
Last week Westland’s 350 farmer shareholders voted overwhelmingly in favour of selling Westland to China’s Yili dairy conglomerate at a rate of $3.41 per share.
Some farmers told RNZ the company’s commercial failures and poor milk payouts had left them no other option but to sell the 150-year-old co-op.
The $588 million deal still needs approval from the Overseas Investment Office, but Westland’s board has said Yili could take over as early as next month.
Despite Pāmu being Westland’s second-largest shareholder the structure of the voting process meant the company was limited to approximately 0.3 per cent of the total potential votes.
Its chair Warren Parker said it was sad to see the co-operative model come to an end, but continuing with the status quo at Westland was an unacceptable financial risk to its West Coast farms and therefore it’s business overall.
“A key consideration for the board in reaching this decision was our assessment that Westland’s current strategy would unlikely be as positive for the future of dairy farming on the West Coast – indeed, no commercially compelling alternatives were being offered by the company.
“Ultimately, it was these considerations that decided our vote in favour of the Yili offer,” Mr Parker said.
The Yili offer was in the best interests of dairying in the region, given the price being offered by the Chinese company and the guarantee to match Fonterra’s farmgate milk price for the next 10 seasons, he said.
Pāmu stands to make more than $11 million from the sale.