Giant New Zealand dairy co-operative rethinks sell-off

Business Materials 18 February 2008 07:53 (UTC +04:00)

( dpa ) - New Zealand's giant Fonterra farmer co-operative - the world's biggest single exporter of dairy products - announced Monday that it was re-thinking a radical plan to sell off 20 per cent of its shares to be traded on the stock market.

Faced with widespread opposition to the proposal, chairman Henry van der Heyden released a letter to Fonterra's 11,000 farmer-shareholders saying, "It is very clear that we will need to spend much more time in consultation and discussion before any final deciding vote in 2010."

Van der Heyden said the board had cancelled a scheduled preliminary vote in May which was designed to create a second company to take over all the assets and operations in preparation for the final ballot two years later on listing the new company on the Stock Exchange.

He said there were "misunderstandings and some misinformation" about last year's proposal to restructure Fonterra, which is the world's fifth largest dairy company and exports to 140 countries.

Fonterra is critical to the New Zealand economy, its exports of milk powder, butter, cheese and other dairy products making up nearly 20 per cent of the country's total exports.

Directors said in December that it needed to restructure to get more capital to compete with multi-national rivals and pursue an aggressive global growth strategy.

The country's dairy farmers have not been convinced and Blue Read, chairman of the company's Shareholders' Council, said the re-think was "prudent" because the implications of opening up the business to outsiders were "significant and irreversible."

Read said farmers accepted that Fonterra needed to adapt to keep pace in the changing global dairy industry, but added, "At the same time, we are a co-operative first and foremost and the fundamental aspects that underpin our business must remain intact."