Westland accepts offer from China
Westland Milk Products farmer shareholders have voted to accept a $588 million purchase offer from Yili Industrial Group, the largest dairy company in China. The vote came after a year of debate about the future of Westland, which has been wracked with debt, paying farmers far less for their milk than other companies elsewhere in New Zealand. The deal still has to be approved by the Overseas Investment Office and the High Court (with the final court hearing scheduled for 18 July).
Westland is the largest employer on the West Coast, with headquarters in Hokitika, where 550 staff work. The dairy company had been looking for outside capital after struggling to be profitable and pay a competitive payout to its 429 farmer suppliers. At $3.41 each, the shares are now worth more than double the $1.50 they have traded at for years. For the average-sized Westland supply farm, this share offer means a potential windfall of about $500,000.
Westland’s top management will collectively receive well over $1m if the deal goes through. Chief executive Toni Brendish will receive $680,000, with other executive staff in line for payments from $100,000 to $360,000, reports stuff.co.nz. Landcorp also stands to gain a windfall of about $11m from the sale, but has not revealed its voting stance.
A group of former Westland Milk Products farmer shareholders wants to be paid the $11m they are owed immediately, rather than after five years as the co-op’s constitution states. They have written to the Overseas Investment Office to stop the sale because they say they are effectively providing “an interest-free loan to a Chinese state-owned multi-national while they are left to struggle financially”, according to a report by stuff.co.nz.
Yili has stated it is “not subject to any state control or direction”, although 25% of the company is owned by the Chinese Government.