Satara-Eastpack merger under review because of Psa outbreak

Thursday 25th November 2010

Satara Cooperative's bid to tie itself up with fellow kiwifruit grower Eastpack is under review because of the outbreak of the Psa bacteria.

The companies were planning on merging their businesses to form a wholly grower-owned unit, but that's now up in the air after Pseudomonas syringae pv actinidiae (Psa) infected 68 orchards, most of which is in Te Puke. Satara has put next month's vote on hold as the companies renegotiate the price and deal structure.

"Whilst both Satara and Eastpack continue to recognise the operational and strategic justification for the merger, the uncertainty around the potential impact of Psa has meant that the original price and deal structure are now under review," Satara said in a statement to the NZX. "A renegotiated transaction may now be presented to shareholders for approval in early 2011."

The kiwifruit industry and the government are jointly funding a $50 million compensation package to manage Psa. The affected orchards make up less than 1% of the nation's $1.5 billion kiwifruit industry.

Satara said the bacteria has had a "minimal impact" on its crop, with three of its orchards testing positive for Psa, and it does not expect a "significant" affect on its supply.

The shares last traded on Oct. 1 at $1.00.

BusinessDesk.co.nz

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