A farmer shareholder with Westland Milk says the sale to Chinese dairy giant Yili was a reluctant one, with farmers under huge pressure to vote for the deal
Farmers agreed to the sale of the 82-year old dairy co-operative at a special shareholder meeting in Greymouth.
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Ninety-three per cent of farmer shareholders voted in favour of the sale to Yili for $588 million.
Farmer shareholder, Jono O'Connor who farms near Westport said it was a reluctant vote under financial pressure.
"Once there was the announcement of huge amount of money that was going to be placed in front of farmers, the banks started telling farmers how to vote," he said
He believed many farmers were sent a clear message from their bankers.
"I don't know if all the banks did, but you can say that in many different ways," said O'Connor.
"The inference is that for the sake of your business it would be far better if this vote went through."
O'Connor said farmers had been pushed into a corner and it was a very sad day for the West Coast.
"Farmers over three generations of their family started the dairy company from nothing and built it up over eighty years."
He said the potential for the co-op had been lost.
"Now it has been handed over to Yili we won't see any of the upside, we'll just get paid the basic price of Fonterra's milk prices."
A lack of viable options for farmers to vote was also cited as an issue.
"The only other option they had was the status quo, and that was painted as a non-viable option.
It would have been very hard to continue farming much very much longer if the status quo."
O'Connor said another option would have been securing some cornerstone investors, to put money into the company, to help it out of its current financial situation.
However Westland Milk Chairman Pete Morrison said shareholders had shown strong support for the proposal, and it was a good deal.
"When the Board initiated the strategic review process, we did so with the full understanding that all Westland farming families needed to have a competitive milk payout. We know this has been, and is, a driving need for all shareholders," he said.
"This proposed transaction will secure a competitive milk payout for at least 10 seasons for all of our existing shareholders and ensures that all of our existing shareholders' milk would be picked up for 10 years," said Morrison.
"The offer of $3.41 per share is significantly higher than the independent adviser's valuation range ($0.88 to $1.38 per share) and the milk supply commitment ensures a minimum price for 10 seasons of at least the Fonterra Farm Gate Milk Price."
He said the board recognised that the vote today was an important milestone in Westland's history.
"While Westland will cease to be a Co-operative, the Board believes the proposed transaction represents the best available outcome for shareholders."
Yili already has a presence in New Zealand, after it acquired Oceania Dairy Group in 2013.
It has since invested approximately $660 million in establishing milk powder, infant formula and UHT production lines for Oceania.
"The board believes that Yili is a good fit for Westland - it provides a very strong route to market as one of the world's leading dairy producers," said Morrison.
The sale remains conditional on certain conditions, including obtaining regulatory consent from the Overseas Investment Office and receiving approval from the High Court ( with the final court hearing scheduled for 18 July).