Despite the comments of chairman-designate John Roadley, analysts are warning that the slow pace of the government decision-making could prevent the merger of New Zealand’s two largest dairy companies by the 1 June deadline.
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The proposed merger between the New Zealand Dairy Group of Companies and Kiwi Cooperative Dairies has attracted widespread support amongst farmers, but the government is responsible for ensuring that resulting company Global Dairies will not abuse its domestic dominance. It will rank as the 14th largest dairy company in the world, and should it get involved the Commerce Commission could easily drag its heels.
The government could chose to bypass involvement by the Commerce Commission by allowing the merger to proceed through special legislation. Agriculture minister Jim Sutton revealed however that even if this is the case the timetable is “very optimistic,” as it can take two months for new laws to be approved through the public submission process and three parliamentary votes.
In a bid to speed up the process, the two companies have promised to remove the export monopoly of the Dairy Board, which will be incorporated by the resulting company, within a year. They also proposed a sell-off of Dairy Group’s 50% stake in domestic company Dairy Foods. Even so, Cabinet’s first meeting of this year is scheduled for 1 February no official consideration can take place until then.
To read about John Roadley’s intentions for Global Dairies, click here.
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