Latest / Best of Business / Jamie Mackay: The Country host on Dawn Meats lining up to buy 65 percent of Alliance Group

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Jamie Mackay: The Country host on Dawn Meats lining up to buy 65 percent of Alliance Group · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talk ZEDB. Follow
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• 0:18
  Speaker 1: The Rural Report on hither do for see Allan Drive.
• 0:21
  Speaker 2: Jamie mckaye, host of the Countries with us A.
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  Speaker 1: Jamie?
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  Speaker 2: Can I hear that? Okay? Talk me through what's going
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  Speaker 2: on with allions?
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  Speaker 1: Right?
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  Speaker 2: Well, the meat industry's worst kept secret was let out
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  Speaker 2: of the bag this morning, so meat prosts of the
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  Speaker 2: Alliance Groups. There's Irish based company Dawn Meats is lining
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  Speaker 2: up to pay two hundred and fifty million dollars for
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  Speaker 2: a sixty five percent steak in the meat co op. Remember,
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  Speaker 2: Heather that the Alliance Group's the only fully owned or
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  Speaker 2: fully farmer owned, one hundred percent cooperative in the meat industry,
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  Speaker 2: or certainly that I know of. Anyhow, It is based
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  Speaker 2: out of Inbicargo, but it's got plants in the North
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  Speaker 2: and South Island. Itsney Zealand's biggest sheep meat exporter. Silver
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  Speaker 2: Fern Farms is our biggest meat processor enterprise. Or this
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  Speaker 2: deal values the enterprise at five one hundred and two
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  Speaker 2: million dollars. Now what are they going to do with
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  Speaker 2: their two hundred and fifty million dollars where they're going
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  Speaker 2: to use. Most of it would seem to pay back debt.
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  Speaker 2: They're going to accelerate the capital expenditure program. Some of
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  Speaker 2: it will go to farmer shareholders. Just how much will
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  Speaker 2: be interesting and how it affects their share value will
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  Speaker 2: be interesting as well. The board unanimously endorsed the deal.
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  Speaker 2: Other suitors there were other suitors. Apparently there were three.
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  Speaker 2: They got down to three. I think I'm reading between
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  Speaker 2: the lines there. I think Silver Fern Farms might have
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  Speaker 2: been close. Of course, that's the other big meat company
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  Speaker 2: in this country, fifty to fifty joint venture with the Chinese,
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  Speaker 2: now bought by Shanghai Mailing a decade ago. And interestingly,
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  Speaker 2: Dawn Meats was understood to have been the underbidder to
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  Speaker 2: that offer in twenty fifteen sixteen. So we need shareholder
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  Speaker 2: acceptance obviously, Heather. If they don't get it, what are
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  Speaker 2: the options for their alliance group? Then asset sales, site
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  Speaker 2: closures we've already seen field in too Maru and further
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  Speaker 2: cost cutting initiatives. And just to give you some idea
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  Speaker 2: about Dawn Meats who they are family owned Irish company
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  Speaker 2: founded in nineteen eighty core and you'll turnover a five
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  Speaker 2: point eight billion compares to one point eight billion that's
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  Speaker 2: New Zealand dollars for the Alliance Group, whose turnover has
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  Speaker 2: been slipping in the past few years. So interestingly the
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  Speaker 2: final point old mats makers. The Alliance Group has come
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  Speaker 2: in for a fair but a flack in recent years
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  Speaker 2: or seasons because as the only one hundred percent farmer
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  Speaker 2: own meat process and co op, it's been accused of
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  Speaker 2: uncooperative sweetheart deals for larger suppliers and third party traders.
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  Speaker 2: See if you pay if your supply fonterra, for instance,
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  Speaker 2: heather or zespery, you get the same no matter whether
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  Speaker 2: your milk or kiwi fruit comes from Northland or Southland.
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  Speaker 2: Not that we grow keywi fruit in Southland just.
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  Speaker 1: Yet, not yet, not yet. But if we carry on
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  Speaker 1: with this climate change in the coal for lote enough
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  Speaker 1: you will be talk to me about BENZ.
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  Speaker 2: Why are they're feeling so confident? Ah, Well, they've led
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  Speaker 2: the charge for their forecast milk price for the twenty
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  Speaker 2: five to twenty sixth season. They've lifted it seventy five
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  Speaker 2: cents to ten dollars twenty five remembering Fonterra started with
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  Speaker 2: a pretty a pretty bullish forecast milk price themselves at
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  Speaker 2: ten dollars, albeit their midpoint wasn't exactly in the middle
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  Speaker 2: because their price forecast range was from eight to eleven
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  Speaker 2: dollars now GEDT last weeks. GDT will have probably buoyed
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  Speaker 2: the Benz a wee bit here. Interestingly, the futures market's
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  Speaker 2: called its heels a wee bit, But this afternoon, when
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  Speaker 2: I last checked, the twenty five twenty six futures market
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  Speaker 2: was trading at ten dollars sixteen, down from ten to
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  Speaker 2: twenty three. If we get another ten dollars payout, hallelujah,
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  Speaker 2: Praise the Lord, because we're going to get one for
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  Speaker 2: the twenty four to twenty five season. That will be
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  Speaker 2: decided by Fonterra anyhow in September or October. Brilliant stuff, Jamie.
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  Speaker 2: Thank you so much, Jamie McKay, Host of the Country.
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