Satara-EastPack merger back on after two-year hiatus

Monday 4th February 2013

Kiwifruit growers Satara Cooperative Group and EastPack are set to resume merger plans shelved after the outbreak of the Psa vine bacteria two years ago.

The deal will see Satara grower shareholders receive one EastPack share for each dollar paid-up of the transactor or investor share, and receive a 5 cent fully imputed special dividend, valuing the deal at 65 cents. That's a 63 percent premium to Satara's current trading price.

Non-grower shareholders will be paid out 60 cents per share, a 50 percent premium, with the merged grower-controlled entity set to be de-listed from the stock exchange's small-cap NZAX.

"The merged company will be totally focused on grower owners' needs, and in a better position to meet their expectations for quality processing, higher orchard gate returns, low packing prices and improved return on investment," Satara chairman Hendrik Pieters and EastPack chair Ray Sharp said in a joint statement.

"We believe that by combining resources, we can reduce costs and operate more efficiently for the benefit of growers," they said.

The companies were set to merge in 2010 until the outbreak of Pseudomonas syringae pv actinadiae scuttled those plans. The financial impact of the disease on the kiwifruit industry was estimated at between $310 and $410 million over the next five years by a Lincoln University study last year.

The merged group is expected to account for between 27 percent and 30 percent of the country's kiwifruit volumes with annual turnover of more than $112 million, and hopes to have greater influence on export marketer Zespri International.

Each company will hold a special shareholders' meeting on Feb. 22 with a view to amalgamate by March 15.

Satara shares were unchanged at 60 cents today.

BusinessDesk.co.nz

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