Meat Sector: Meat Industry Can’t Take Blame For Its Decline
August 25th, 2010
AFFCO’s independent directors have recommended minority shareholders don’t accept Talley’s Group’s 37c-a-share offer for the 47% of the meat processor it doesn’t already own – unless they need the money. The directors themselves say they’ll stick with the company, which will end up at least 76%-owned by the fishing, ice cream, meat, dairy and vegetable group. AFFCO requires considerable ongoing investment to keep its plants up to export standard and reinvestment comes at the expense of dividends.
Chairman Sam Lewis acknowledges the challenges for the meat industry in his formal response to the Talley’s offer, saying overcapacity and an uncertain global economic environment has created uncertainty and speculation around “industry structural issues.”
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Lewis says the industry alone can’t take all the blame for dwindling stock numbers and conversion of pastoral farm land to more profitable uses. “Meat prices in foreign currency are at all time highs, however the volatility of the NZ exchange rate, poor wool prices and increased farm costs both in farm inputs and land have also contributed to this outcome.” The takeover is a requirement of Talley’s agreement to buy the 24% stake in AFFCO owned by Spencer family interests and having to make the same offer to all shareholders. Talley’s will tighten its grip on a wider segment of the nation’s food production including AFFCO’s 35% stake in cheesemaker Open Country Dairy.
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