Alliance Group faces the risk of “potential insolvency” if its shareholders reject Dawn Meats’ bid to acquire a majority stake in the New Zealand-based meat cooperative.
Just over a month ago, Ireland-based Dawn Meats put forward an offer to purchase a 65% interest in Alliance Group for NZ$250m ($146.3m).
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In a statement on 18 September, Alliance Group chair Mark Wynne urged shareholders to accept the offer, saying “the board has unanimously recommended” the proposal.
The recommendation came after shareholders received a scheme booklet on the proposed investment ahead of a vote and special general meeting scheduled for 20 October.
According to Wynne, Alliance has “implemented significant positive change” over the past two years under a revised strategy, and it is now a “leaner, fitter and stronger business”, anticipating a return to profitability this year.
Should the shareholders decide against accepting the Dawn Meats’ bid, Alliance Group suggested its options are limited.
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By GlobalDataThe co-op said it could consider asset sales, site closures, and cost reductions. Alternatively, it might seek to raise capital from shareholders or other investors, or go into insolvency.
Included in the scheme booklet is a report from independent adviser Northington Partners, which suggests that the offer from Dawn Meats is the “best” and the “only one” to meet the co-op’s strategic and financial needs.
Wynne said the investment would “give us the capital we need to thrive” and that “it also comes at a very attractive premium”.
Alliance Group, owned by about 4,300 shareholders, reported revenue of NZ$1.8bn in 2024 but posted a loss after tax of NZ$95.8m.
Wynne said “the company must now recapitalise its balance sheet at this critical juncture”.
He added: “This essential capital investment by Dawn Meats will strengthen our financial position, enhance our operational capabilities and enable us to create and extract more value in market.”
The proceeds generated from the investment would be allocated toward decreasing Alliance Group’s short-term working capital by about NZ$200m and distributing up to NZ$40m to the co-op, contingent upon livestock availability, according to the statement.
Alliance Group’s equity was valued at NZ$0.35 to NZ$0.87 per share, with a midpoint of NZ$0.61, the co-op said. Dawn Meats’ offer values the Group at NZ$1.05 to NZ$1.31, offering a 93% premium, it added.
Dawn Meats is a family-run business headquartered in County Waterford, and operates under the name Dunbia in the UK.
It specialises in processing lamb and beef, with a network of 11 facilities across Ireland and 13 in the UK.
Dawn Meats supplies both the retail and foodservice sectors, similar to the Alliance Group.
For the deal to proceed, it requires at least 75% acceptance from the shareholders who vote on the proposition, as well as a majority of over 50% of the total shareholders in Alliance Group voting in favour.
“Combined with the detail of the proposal”, the independent report “reinforces the Alliance board’s strong belief that accepting this proposal is, without doubt, the best available option for shareholders to take,” Wynne said.
The statement read: “If shareholders do not vote to support the proposal, as concluded within the Northington Partners report and due to the unsustainable level of debt Alliance is carrying, the Alliance board would be obligated to enter a process led by its banking syndicate and face the risk of potential insolvency.”
