Silver Fern Farms Board Unanimously Recommends Partnership with Shanghai Maling
• Board gives unanimous recommendation to accept Shanghai Maling Aquarius Group (Shanghai Maling) as new partner to
secure an improved and sustainable future
• A 50:50 partnership with total commitment to our global plate to pasture strategy
• Transaction values Silver Fern Farms’ equity at $311m. This equates to $2.84 per ordinary share, which compares to the
$0.35 share price prior to their suspension in July
• Shanghai Maling to invest $261m in cash to own 50% of Silver Fern Farms’ business, in partnership with the existing
Silver Fern Farms Co-operative
• A special dividend of $0.30 per share to Co-operative ordinary and rebate shareholders
• The investment will see the company with no debt and a positive cash position at next year end
• Provides Silver Fern Farms with significant financial capability to accelerate its global ‘Plate to Pasture’ strategy,
and to invest in improvements to its plant network.
• Positions Silver Fern Farms with a competitive advantage in China; the world’s fastest growing red meat market
• Creates New Zealand’s financially strongest red meat processing company
• Retains the supplier-controlled co-operative as a 50% shareholder
The Board of Silver Fern Farms announced today that it will recommend unanimously to its shareholders that a partnership
is formed with China’s leading meat processor Shanghai Maling, a listed company based in Shanghai, owned 38% by Bright
Food Group.
Rob Hewett, Chairman of Silver Fern Farms, said the Board’s recommendation to co-operative shareholders is to create a
new 50 / 50 partnership with Shanghai Maling and to work together to grow a profitable long-term global business
providing sustainable returns to shareholders.
“Under the proposed deal Shanghai Maling will invest $261 million in cash for half of Silver Fern Farms’ business. The
investment will be into a company, to be named Silver Fern Farms, which will own all of the assets of the business, and
be owned 50 percent by the existing Silver Fern Farms Co-operative and 50 percent by Shanghai Maling. In addition, the
Board of the Co-operative plans to redeem the 5.5m Supplier Investment Shares it has outstanding and pay a $35m (30cps)
special dividend to ordinary and rebate shareholders at the time of the transaction. This dividend will be a welcome
return and one which will set expectations moving forward.”
“Existing ordinary and rebate shareholders will retain their current shares in the Co-operative and supplier
shareholders will continue to supply their livestock through the Co-operative,” said Mr Hewett.
Mr Hewett adds that by Shanghai Maling investing $261 million of cash into the business in return for 50%, the
Co-operative will own 50% of a business whose equity value has effectively doubled in size.
“The implied value of the transaction of $2.84 per ordinary share compares to a share price of 35 cents when the trading
of shares was suspended in July.”
Mr Hewett notes that the intention going forward, subject to board approval at the time, is for Silver Fern Farms to
return 50% of profits every year to its two shareholders.
“The Board considered many options for new capital, both locally and internationally, but Shanghai Maling stood out for
the enormous opportunities and ongoing benefits for the Co-operative, its shareholders and supplying farmers.
“We are very excited by this partnership proposal with Shanghai Maling and believe they are the best partner for Silver
Fern Farms. Our values are closely aligned. The proposed deal has many long-term benefits for the co-operative including
full support for our global ‘Plate to Pasture’ strategy, and the means to accelerate the strategy in a number of key
markets as a result of the investment of substantial new capital.
“This new partnership will see Silver Fern Farms in a cash positive position at year end, which will allow us to both
reinvest more aggressively in executing our strategy but also to share profits via regular payments of dividends to the
two shareholders and maintain competitive procurement prices for our livestock suppliers.
“The Co-operative will receive 50% of those future dividends and intends, subject to the Co-operative Board approval at
the time, to in turn provide regular payments of dividends and rebates to shareholders.”
Dean Hamilton, Chief Executive, Silver Fern Farms said Shanghai Maling brings more than just capital because they
provide the co-operative with a huge opportunity in China.
“This has the potential for us to establish a unique position in what is the fastest growing red meat market in the
world. Shanghai Maling’s integrated supply chain model will allow us to advance our product development and consumer
marketing abilities in that market in ways we could not do ourselves, or with any other local or international
investor,” said Hamilton.
“Silver Fern Farms will continue to be responsible for its sales and marketing efforts in China just as it is in other
countries around the world. Where it makes sense for all parties, we will be working with Shanghai Maling to create
products in New Zealand specifically for China, and will leverage its (and Bright Group’s) significant wholesale and
retail networks. We expect the in-market relationship to build naturally over time,” he said.
Mr Hewett said shareholders and suppliers will have the opportunity to hear more about the partnership over coming
weeks.
“We expect to send shareholder materials out ahead of a shareholder meeting planned for October 16. The investment is
subject to shareholder approval by both parties and regulatory approvals in both New Zealand and China. We expect the
transaction to be completed in the first half of next year.
“What is clear is that the traditional industry model hasn’t consistently delivered for farmers or processors over a
sustained period of time. Our shareholders and farmer suppliers believe in our added value strategy, but the key missing
link has been a strong financial position from which to execute.
“We have arrived at a position where we have a genuine game changing opportunity for our business. We have a partner who
supports our strategy, wants us to accelerate, has the resources and relationships to help us specifically in China, and
will provide us with significant capital to put us in a position of not only financial sustainability, but one of
strength. It will enable us to reinvest in the business in a manner we simply cannot achieve by ourselves. The end
result should be higher, and more stable, returns from the plate to the pasture.
“We are excited about what this partnership can bring to the business, to our shareholders and to supplying farmers.
“I truly believe this partnership will be a defining moment for our business and the co-operative as a whole. We will
look back on this in 5 to 10 years’ time and know it was the catalyst for us to propel our business forward in a way,
even a year ago, we never thought possible,” Mr Hewett said.
ENDS