Satara shareholders shoot down kiwifruit merger plan with Seeka

Monday 5th December 2011 1 Comment

Satara Cooperative Group shareholders have voted against a proposed merger with larger rival Seeka Kiwifruit Industries that was seen as giving scale in an industry hurt by the vine-wasting disease Psa.

Satara’s shareholders “have voted an agreed not to amalgamate Satara and Seeka Te Puke,” the companies said in a statement. The two companies are now “pursuing business as usual.”

Executives at the two kiwifruit companies weren’t immediately available to comment on the derailed merger, which had the support of their boards.

Under the deal, shareholders of Satara would have owned 33 percent of a merged company handling 30 percent of the national kiwifruit crop and 20 percent of the avocado harvest.

Satara chairman Hendrik Pieters and his Seeka counterpart Kim Ellis have said impact of Psa can’t yet be quantified but both companies are losing fruit post harvest.

In October, Seeka cut 41 jobs at a net cost of $600,000. It has forecast earnings before interest, tax, depreciation, fair value adjustment and asset revaluations of $18.5 million to $19.5 million this calendar year. That implies almost no earnings in the second half after a first-half profit of $18.8 million.

Shares in Satara have halved in value in the past five years to trade recently at 38 cents, while Seeka stock last traded at 99 cents, implying a merged company market value of $20.5 million.

BusinessDesk.co.nz

Comments from our readers

On 5 December 2011 at 11:56 am Neil said:

Silly people. Consolidation in the kiwifruit industry has to come. They can't all survive for the next 3 to 5 years with annually decreasing incomes given the rate of spread of PSA within NZ. Typical situation where an owners' co-operative can't see the forest for the trees. In another 12 months, they will be wishing they had agreed to merge with the largest NZ listed operator but by then it will be a case of 1:12 shares or perhaps even less. A downsized Seeka will survive until a PSA resistant cultivar is developed but I'm not so sure about Satara. Talk about co-op owners shooting themselves in the foot by resisting needed change.