Media Statement
Embargoed Until 0100 Saturday 27 January 2001
VALUATION RELEASE A “MAJOR STEP”
This weekend’s mail-out to shareholders of the independent valuation of the New Zealand Dairy Group and Kiwi
Co-operative Dairies is a major step towards the formation of Global Dairy Company, Henry van der Heyden, Chairman of
the Dairy Group, and Greg Gent, Chairman of Kiwi, said today.
The report, by leading international consultancy Arthur Andersen, was commissioned under Section 2 of the Merger
Agreement signed by the two companies before Christmas. It shows the Dairy Group and Kiwi to be of comparable value,
eliminating the need for one to make cash payments to the shareholders of the other.
“This is the first time outside experts have independently analysed the relative values of the two companies,” the
chairmen said. “Arthur Andersen noted that they found this a particularly complex task because of the industry
structure. They found the two companies to be so close in value that they cannot be separated, avoiding the complication
of any cash pay-outs. The valuation is therefore a major step towards the merger of the two companies and the creation
of Global Dairy Company.”
The chairmen said they were satisfied with the rigour and independence of the process. This involved Arthur Andersen
receiving all relevant information from the Dairy Group and Kiwi, and reviewing it to test its accuracy and ensure its
comparability. Two methodologies, both of which are international standards, were then used to value the companies.
more …
Under one methodology the Dairy Group was valued one cent per share more than Kiwi, while the other methodology put Kiwi
three cents ahead.
When the values were expressed as a value range per kilogram of milk solid supplied by shareholders, one methodology put
the Dairy Group five cents ahead and the other put Kiwi four cents ahead. Both these valuations were far from the 20
cent per kilogram of milk solid threshold that would have forced one company to pay the shareholders of another, as
specified in the Merger Agreement.
Mr van der Heyden said the valuation showed that both companies had continued to improve their respective performances
and that having two strong companies going in to the merger could only be good news. “We know there is $300 million per
annum to be gained from this merger. That’s about 30 cents per kilogram of milk solids per annum for farmers.”
Mr Gent said the most successful mergers were those where both parties entered the new company as equals. “That will be
the case with Global Dairy Company and that will be good for farmers and good for New Zealand.”
Shareholders of both companies will begin to receive information on the valuation this weekend, before shareholder
meetings planned for next week to discuss the full Merger Package.
END
Interviews with Mr Gent can be arranged through Shona Glentworth, Kiwi Co-operative Dairies, on 06 278 9309 or 025
536928
Interviews with Mr van der Heyden can be arranged through Alan McDonald, New Zealand Dairy Group, on 07 8398398 or 025
830844