Financial support sought to stop Westland Milk takeover

A campaign has been launched to try and stop the sale of Westland Milk to Chinese dairy giant Yili.

Farmer shareholders agreed to the sale of the 82-year-old dairy co-operative at a special shareholder meeting in Greymouth this month.

Ninety-three percent voted in favour of the sale for $588 million, and the sale has been given final approval by the Overseas Investment Office and the High Court.

However the leader of political party Social Credit wants to lodge an urgent injunction to stop the sale, and is seeking financial and legal support.

Party Leader Chris Leitch said it needs to be lodged before the takeover date of August 1st.

"This takeover will leave Fonterra as the only significant New Zealand owned processor of milk products," he said.

He's concerned that should Fonterra get into further difficulties no New Zealand purchaser would have the capacity to take ownership of the company, with the likely purchaser therefore being another Chinese corporate. 

"This would leave virtually New Zealand's entire milk processing capacity in the hands of overseas companies, mainly Chinese, with Tatua, which processes milk from only 114 farms, the only locally owned processor," said Leitch.

He claims the Yili deal was the only option presented to farmer shareholders when there were other options available.

"The board did not pursue investigation of two significant options, one being a merger with Fonterra, and the other being an approach to the government for assistance by way of a Reserve Bank loan and/or assistance from the Provincial Growth Fund."

 Westland Milk Chairman Pete Morrison said earlier that shareholders had shown strong support for the proposal, and it was a good deal.  

Pete Morrison said the sale was good for shareholders and the region.
Pete Morrison said the sale was good for shareholders and the region. Photo credit: Supplied

"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.

He said the sale would secure a competitive milk payout for at least 10 seasons for existing shareholders and would see their milk picked up for 10 years.

"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."