New Zealand kiwifruit groups Seeka and Satara could be on the verge of a merger that will create a company representing a third of the industry in the country.
According to a news release on the Satara website, the move – which still requires Satara shareholders' approval – involves Satara shareholders swapping their shares in Satara for shares in Seeka, receiving one Seeka share for every 3.14 Satara shares.
In setting the exchange ratio, the groups said that they had placed emphasis on the relative net assets of each company, with directors confirming this as the most appropriate method of valuation 'given the liquidity of each company's shares and the uncertainty over current earnings due to Psa'.
'In light of the unprecedented pressure currently being brought to bear on the kiwifruit industry from the outbreak of Psa, the board of Satara has been conscious of preserving the capital invested in our business, and continuing to offer our growers the best possible packing charges and service, both of which the Satara board is very confident of achieving for growers through the combined Seeka/Satara group,' said Satara chairman Hendrik Pieters. 'The board believes that the resulting financial benefits and increased efficiencies of a larger group will deliver to our growers and stakeholders a more solid proposition over the short and longer term and, more importantly, in the current Psa environment.'
Kim Ellis, chairman at Seeka, agreed that the two companies were 'like-minded', that were determined to survive in the current environment.
'Seeka believes that the amalgamated company will be well positioned to weather the impacts of the outbreak of Psa-V,' Ellis said. 'The amalgamated company will concentrate processing on the most efficient sites, with the best coolstore configuration. This means surplus capacity will be able to be realised, lowering debt and creating a stronger combined company focused on supporting growers.
'Fragmentation of the kiwifruit industry has long hindered rationalisation to save costs and this combination makes sense from a number of perspectives in these very uncertain time.'
Following the merger, Satara will have the option of continuing to operate under the same terms and conditions already agreed for the 2012 packing season, or the group may elect to choose Seeka's packing charges for 2012 – although from 2013 onwards, all growers will be offered the same charges.
Seeka chief executive Michael Franks will hold the position of CEO for the amalgamated entity, with the board of Seeka taking on Hendrik Pieters as a director.
The companies are aiming to have the new business up and running with integrated operations before the 2012 season, following a special meeting to seek Satara shareholder approval in early December.
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