August 3, 2025 • 7 mins
Primary sector journalist at BusnessDesk says a long-awaited deal to recapitalise Alliance Group appears to be nearing. Over the weekend, the Irish Times reported that Dawn Meats looked set to stump up with $270 million for a 70% stake in Alliance, which is currently the country’s only fully farmer-owned red meat co-operative.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome back to the country. A bit of Selene on
it the behest of our next guest. That Ryan's didn't it?
Riley Kennedy, Prime Receptor Journal at Business Desk. I'm not
a big Selene fan, but this is all right. This
is the Selene with the beg's. I can live with that. Riley.
Good afternoon, Good afternoon, Jenny.
Speaker 2 (00:20):
How are you well?
Speaker 1 (00:21):
I'm not bad. Now. You've been doing some interesting work
around the recapitalization of the Alliance Group. We know that
the status quo cannot remain. But the Irish Times came
out with the story over the weekend, or it might
have been Friday. So the inside oil or the oil
appears to be that they're going to pay two hundred
(00:42):
and seventy million dollars New Zealand for a seventy percent
stake in the Alliance Group cooperative. Are they getting a
bargain or are they paying too much?
Speaker 2 (00:53):
Well, we have First Investment Bank.
Speaker 1 (00:54):
Is that?
Speaker 2 (00:55):
But it sort of really confirms the speculation that's been
going on for a long time of Dawn. I suppose
a new Dawn that waits for Alliance. But this process
has been going on so eighteen months. I think you know,
and so we're really getting to I suspect this time
next week.
Speaker 1 (01:12):
No, I think I think it's next Tuesday. Isn't it
the twelfth of September?
Speaker 2 (01:15):
Yeah, yeah, this week we'll be having a different conversation,
and I suspect we probably won't be proven wrong on
that speculation. No.
Speaker 1 (01:23):
No, normally where the smoke was fire, so it looks
like it as Dawn meats. But there were other suitors,
is that right?
Speaker 2 (01:29):
Yeah? Silver Fon Farms were the only New Zealand processor
to come out and say that they were interested what formed,
But I don't think that went any further. I think
every New Zealand process have probably looked at it in
terms of consolidation because the red meat sector in New Zealand,
I mean, weird been as simplistic byre putting it, but
in quite an awkward situation where global demand for red
(01:52):
meat is at near record levels, particularly for beef, but
in New Zealand we don't have the supply of last
stop to match that, and we also have six process
plants and I think everyone is of the opinion that
can't continue. So I think every New Zealand process have
probably looked at it for in terms of consolidation.
Speaker 1 (02:10):
But wouldn't it be a better deal for New Zealand
farmers if we could get like a mega merger. And
we've talked about these for decades, but a mega merger
between Silver Ferned Farms and the Alliance Group might be
a better result for New Zealand red meat farmers than
having an overseas company take a seventy percent steak. They
also take seventy percent of the profits, you would assume.
(02:33):
And I was talking to former Alliance chairman John Turner
this morning. I've been working the phones. You'll be pleased
to know' riley and he said, originally the Alliance Group
was set up in the sixties to stop overseas companies
ripping off in his words, New Zealand farmers. Are we
going back to the future.
Speaker 2 (02:54):
Yeah, well you could say that equally. You could say
that door meat might bring other markets to New Zealand,
will access to markets New Zion that we currently don't have.
I was at the red Meat comments the other day
and I asked someone is a time for a frontier
of the red meat industry at the time that we
have a single desk sort of exporter in New Zealand
(03:17):
to help with that consolidation. But I think there's a
lot of water to go under the bridge before the
sign printers put on the steel.
Speaker 1 (03:25):
So okay, we'll run with the numbers we've been given
at this stage at supposition, I know, but two hundred
and seventy million. That's one hundred and forty million euros
for that seventy percent stake. But when I look through
my raft of pages in front of me, the Alliance
Group already has loans and borrowings of two hundred and
(03:47):
thirty two million, so you know they're barely covering their debt.
Speaker 2 (03:52):
Yeah, and I think the most interesting part will be
what if for all any payment has made to farmers
as bigly will be and what they're doing venture looks
like and with a you know, it's it's a minority
stake by the cooperative where the Alliance Cooperative continues but
have a thirty percent steak in the operating company of Aliance,
(04:14):
similar to Silver and Fund.
Speaker 1 (04:15):
But that that but well it's not quite similar because
Silver fir and Farms correct me if I'm wrong. Fifty
to fifty, isn't it? With Shanghai Island.
Speaker 2 (04:22):
It's fifty to fifty, but whether the structure is the
same and whether the cooperative has a thirty percent steak
as opposed to fifty percent.
Speaker 1 (04:29):
Well, well, I'm assuming it will, because I mean, well,
they are a cooperative and I'll have to do something
with the farmer shares. But it's not a very powerful steak,
is it.
Speaker 2 (04:39):
No, No, it's not that thirty percent is still it's
better than nothing at the end of the day.
Speaker 1 (04:44):
Really, Oh yeah, I don't know. Okay, So how does
this thing? How does this thing play out? We wait
till next Tuesday, do we? Because I've been look even
all these disgruntled and I know a lot of them
because I'm a Southland and myself high profile, high powered
Southland shareholders, none of them are prepared to talk. They
(05:05):
don't want to say anything, and I guess I understand that,
and that's fair enough. They don't want to compromise the situation.
I know a lot of work has been going on
in the background, But it would it appear to me
that maybe not all the Farmer shareholders are very happy
with this proposal.
Speaker 2 (05:23):
No, I suspect not, and I suspect there will be
some level of opposition to this Winston Peters's first have
said that, you know, they will look to put up
some sort of opposition to it, but I would be
very surprised if this goes through without any sort of opposition,
as the Shanghai mailing and Silvan farms do.
Speaker 1 (05:42):
Ten years of you that. There was one other interesting
comment in the story from the Irish Times, and that
was from David Pinckney. Now David or as family owns
one of the biggest and best farming operations in the country.
Call an airy station down and down not far from
where I was born and raised, and he's saying, maybe
(06:03):
he's throwing this, he's flying this kite. Maybe with the
improvement and red meat returns that there may be perhaps
an appetite from Farmers shareholders to fund it. There wasn't
last time when they asked for an internal capital race.
I'm not sure if I was an Alliance shareholder, I'd
be keen to tip more money in what are.
Speaker 2 (06:21):
You hearing now? The Alliones were very clear throughout some
entire process that they had that Farmers had three options.
They either stumped up and recapitalized it and that didn't
go that well, which she was external factor does that
play there? With the slump in the red net market,
there was either going to be a JV or the
entire business is sold, and it appears that it's going
to be a JV. But I think the time to
(06:43):
recapitalize it's probably past what Farmer's recapitalizing it sorry, has
probably passed and now it's time to move on with
whatever deal they bring out on Tuesday.
Speaker 1 (06:54):
Well, you can hear Selene in the background. It's time
to bid you farewell. Riley Kennedy. You keep up the
good work business desk.
Speaker 2 (07:01):
Thanks Jimmy,
Welcome back to the country. A bit of Selene on
it the behest of our next guest. That Ryan's didn't it?
Riley Kennedy, Prime Receptor Journal at Business Desk. I'm not
a big Selene fan, but this is all right. This
is the Selene with the beg's. I can live with that. Riley.
Good afternoon, Good afternoon, Jenny.
Speaker 2 (00:20):
How are you well?
Speaker 1 (00:21):
I'm not bad. Now. You've been doing some interesting work
around the recapitalization of the Alliance Group. We know that
the status quo cannot remain. But the Irish Times came
out with the story over the weekend, or it might
have been Friday. So the inside oil or the oil
appears to be that they're going to pay two hundred
(00:42):
and seventy million dollars New Zealand for a seventy percent
stake in the Alliance Group cooperative. Are they getting a
bargain or are they paying too much?
Speaker 2 (00:53):
Well, we have First Investment Bank.
Speaker 1 (00:54):
Is that?
Speaker 2 (00:55):
But it sort of really confirms the speculation that's been
going on for a long time of Dawn. I suppose
a new Dawn that waits for Alliance. But this process
has been going on so eighteen months. I think you know,
and so we're really getting to I suspect this time
next week.
Speaker 1 (01:12):
No, I think I think it's next Tuesday. Isn't it
the twelfth of September?
Speaker 2 (01:15):
Yeah, yeah, this week we'll be having a different conversation,
and I suspect we probably won't be proven wrong on
that speculation. No.
Speaker 1 (01:23):
No, normally where the smoke was fire, so it looks
like it as Dawn meats. But there were other suitors,
is that right?
Speaker 2 (01:29):
Yeah? Silver Fon Farms were the only New Zealand processor
to come out and say that they were interested what formed,
But I don't think that went any further. I think
every New Zealand process have probably looked at it in
terms of consolidation because the red meat sector in New Zealand,
I mean, weird been as simplistic byre putting it, but
in quite an awkward situation where global demand for red
(01:52):
meat is at near record levels, particularly for beef, but
in New Zealand we don't have the supply of last
stop to match that, and we also have six process
plants and I think everyone is of the opinion that
can't continue. So I think every New Zealand process have
probably looked at it for in terms of consolidation.
Speaker 1 (02:10):
But wouldn't it be a better deal for New Zealand
farmers if we could get like a mega merger. And
we've talked about these for decades, but a mega merger
between Silver Ferned Farms and the Alliance Group might be
a better result for New Zealand red meat farmers than
having an overseas company take a seventy percent steak. They
also take seventy percent of the profits, you would assume.
(02:33):
And I was talking to former Alliance chairman John Turner
this morning. I've been working the phones. You'll be pleased
to know' riley and he said, originally the Alliance Group
was set up in the sixties to stop overseas companies
ripping off in his words, New Zealand farmers. Are we
going back to the future.
Speaker 2 (02:54):
Yeah, well you could say that equally. You could say
that door meat might bring other markets to New Zealand,
will access to markets New Zion that we currently don't have.
I was at the red Meat comments the other day
and I asked someone is a time for a frontier
of the red meat industry at the time that we
have a single desk sort of exporter in New Zealand
(03:17):
to help with that consolidation. But I think there's a
lot of water to go under the bridge before the
sign printers put on the steel.
Speaker 1 (03:25):
So okay, we'll run with the numbers we've been given
at this stage at supposition, I know, but two hundred
and seventy million. That's one hundred and forty million euros
for that seventy percent stake. But when I look through
my raft of pages in front of me, the Alliance
Group already has loans and borrowings of two hundred and
(03:47):
thirty two million, so you know they're barely covering their debt.
Speaker 2 (03:52):
Yeah, and I think the most interesting part will be
what if for all any payment has made to farmers
as bigly will be and what they're doing venture looks
like and with a you know, it's it's a minority
stake by the cooperative where the Alliance Cooperative continues but
have a thirty percent steak in the operating company of Aliance,
(04:14):
similar to Silver and Fund.
Speaker 1 (04:15):
But that that but well it's not quite similar because
Silver fir and Farms correct me if I'm wrong. Fifty
to fifty, isn't it? With Shanghai Island.
Speaker 2 (04:22):
It's fifty to fifty, but whether the structure is the
same and whether the cooperative has a thirty percent steak
as opposed to fifty percent.
Speaker 1 (04:29):
Well, well, I'm assuming it will, because I mean, well,
they are a cooperative and I'll have to do something
with the farmer shares. But it's not a very powerful steak,
is it.
Speaker 2 (04:39):
No, No, it's not that thirty percent is still it's
better than nothing at the end of the day.
Speaker 1 (04:44):
Really, Oh yeah, I don't know. Okay, So how does
this thing? How does this thing play out? We wait
till next Tuesday, do we? Because I've been look even
all these disgruntled and I know a lot of them
because I'm a Southland and myself high profile, high powered
Southland shareholders, none of them are prepared to talk. They
(05:05):
don't want to say anything, and I guess I understand that,
and that's fair enough. They don't want to compromise the situation.
I know a lot of work has been going on
in the background, But it would it appear to me
that maybe not all the Farmer shareholders are very happy
with this proposal.
Speaker 2 (05:23):
No, I suspect not, and I suspect there will be
some level of opposition to this Winston Peters's first have
said that, you know, they will look to put up
some sort of opposition to it, but I would be
very surprised if this goes through without any sort of opposition,
as the Shanghai mailing and Silvan farms do.
Speaker 1 (05:42):
Ten years of you that. There was one other interesting
comment in the story from the Irish Times, and that
was from David Pinckney. Now David or as family owns
one of the biggest and best farming operations in the country.
Call an airy station down and down not far from
where I was born and raised, and he's saying, maybe
(06:03):
he's throwing this, he's flying this kite. Maybe with the
improvement and red meat returns that there may be perhaps
an appetite from Farmers shareholders to fund it. There wasn't
last time when they asked for an internal capital race.
I'm not sure if I was an Alliance shareholder, I'd
be keen to tip more money in what are.
Speaker 2 (06:21):
You hearing now? The Alliones were very clear throughout some
entire process that they had that Farmers had three options.
They either stumped up and recapitalized it and that didn't
go that well, which she was external factor does that
play there? With the slump in the red net market,
there was either going to be a JV or the
entire business is sold, and it appears that it's going
to be a JV. But I think the time to
(06:43):
recapitalize it's probably past what Farmer's recapitalizing it sorry, has
probably passed and now it's time to move on with
whatever deal they bring out on Tuesday.
Speaker 1 (06:54):
Well, you can hear Selene in the background. It's time
to bid you farewell. Riley Kennedy. You keep up the
good work business desk.
Speaker 2 (07:01):
Thanks Jimmy,
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