NZ government to decide on dairy merger

The New Zealand government is likely to approve the mega-merger between the major forces in the dairy industry and give it the necessary exemption from competition rules, Agriculture Minister Jim Sutton said this week. The proposed merger, dubbed Global Dairy Co, would bring together NZ Dairy Group​, Kiwi Co-operative Dairies​and the monopoly regulated exporter, the Dairy Board​. The new company would process around one billion kg of milk solids a year - almost all of New Zealand's production. The New Zealand cabinet on Monday will consider an application from the two companies involved seeking an exemption for the proposed merger from the competition rules of the Commerce Act, Sutton said. Industry and government officials have been working since January on issues surrounding the merger, such as contestability of supply, fair entry and exit value for suppliers wanting to leave the company, future management of quota, and unbundling of returns to farmer suppliers. Sutton stated that if cabinet exempted the merger, attention would switch to drafting a law change which would take at least three months to be passed by Parliament. The new company would still be farmer owned but have up to $NZ 150 million in capital notes listed on the NZ Stock Exchange. It would have major interests in Australia, with NZ Dairy Board planning to take a 25 per cent stake in Bonlac Foods Ltd, NZ Dairy Group holding just over 18 per cent of National Foods Ltd and Kiwi owning two thirds in Peters & Brownes. Source: Industry Search