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Latest Responses (this topic): 21 February 2008: B Ford, Ashburton

The mega merger of the meat industry

20 February 2008

What a difference the loss of two directors makes.

"Alliance is the pride of Southland and there was no way our independence could be compromised by merger proposals".

Eight weeks later, three new board members and the chair announces to the world a radical plan that propels the Alliance board into the forefront of change!

What then does that say about the old guards stewardship? And what does it say about a group of determined shareholders finally getting control of their company?

There is now a need for a reality check.

I hope readers will forgive my cynicism for what is to follow.

The Alliance board has obviously not just had a change of heart, but a complete transplant, (Mark and Jason?) if their proposal is to be believed as genuine. I have my doubts for these reasons.

The meat companies have a massive credibility problem. For too long they have watched and waited for something to turn up instead of driving the need for change. Now that the directors see all their own heads on the block, they seek change. That's positive.

The Alliance proposal has a major flaw. Not in the proposal itself but in carrying it out to its final conclusion. The problem is the entrenched distrust, patch protection and in some cases, an almost hatred of each other. These people are now expected to suddenly shed their personal animosities and work cooperatively for the greater good of the industry. I don't think so - but I guess any thing is possible.

I have long argued that we need a complete change of boards to achieve a worthwhile outcome. I still hold that view. (An opportunity was lost at the Alliance annual meeting to challenge another director's contribution)

It could be argued that Mr Poole knows full well that what he is proposing is unachievable and is merely an elaborate rouse to restore the Alliance Groups standing in the eyes of their shareholders. I hope I am wrong but it is tough enough to merge with one company let alone four or five - all at the same time.

AFFCO, or Talleys to be precise, have a reputation for being very independent tough players yet their cooperation is vital. PPCS are rumored to have their own rescue package. Other crucial companies are believed to be doing ok so why should they join the cartel?

There needs to be an independent body to pull this concept together otherwise the concept may well wither on the vine for all the above reasons. Yes - the logic behind a single sheep meats company which controls 80% of the exports is sound. The vital issue however is this.

Who will be on the board and who will manage the new mega company? Present incumbents need not apply.

If the new mega company gets the wrong directors and managers we are in the proverbial up to our necks. That is a huge risk and is why I have always said - we need to clean out the incumbent directors before the mega meat co gets traction.

Replacing the coops and 2 others with the same directors on the new single board scares me witless as the impact of their wrong decisions on us will be directly proportionate to the size of the new company.

Gerry Eckhoff, Roxburgh