It is understood that Silver Fern Farms had recently approached Alliance about a possible merger but the offer was rebuffed because “it would not lead to wider industry aggregation”.
However, in an open letter to shareholders of both firms at the weekend, directors of Silver Fern Farms asked for feedback on the merits of a possible merger.
“Notwithstanding the impact the recent weather has had on livestock numbers and the potential further exodus from the sheep and beef sector, Silver Fern Farms remains convinced a strategic direction and supporting structure needs to be advanced for our industry,” directors said.
“We believe that a different ownership structure, and consolidation within the industry, is important to capitalise on a strategy that is market focused,” the letter noted.
Directors added that by putting the two co-operatives together as a “first stage” will create “scale and financial strength to under-pin such a strategy”.
The letter stated: “A lead needs to be taken. It should not be a lead about self preservation but a lead about creating a ‘NZ Inc’ strategic approach to the marketing of New Zealand red meat and associated products.
“We have exhausted direct attempts to achieve such an objective and now look to the shareholders of our two New Zealand farmer controlled co-operatives to have a direct say and to give direction as to how they would like their industry and co-operative to advance,” it added.
Once feedback is given, directors said it will then be up the respective boards to “accept or ignore” these.
However, Alliance chairman Owen Poole told The Otago Daily Times that the letter was published without his company’s knowledge and “it did not have the support of the board”.
It is understood the board had evaluated the merger three times and commissioned an independent assessment but that each time it had been rejected.
Alliance Group could not be reached for comment.