It was confirmed this week that Dawn Meats is set to invest NZ$250m (€128m) to acquire 65% of New Zealand’s Alliance Group.
The board of the red meat co-operative unanimously recommended the offer to farmer shareholders who will vote on the proposal in October.
Alliance Group chair Mark Wynne described the Dawn bid as a “very compelling offer”. The co-op announced that it was seeking outside investment at the end of 2024.
Initial interest was high, but when they were considered against pre-determined criteria, the number was whittled down to six, then three and finally to the recommendation for the Dawn bid.
“Across our criteria, Dawn Meats was by far the best offer,” Wynne said.
The proposal will need to get approval from members and from regulators in New Zealand. Alliance will start a series of roadshows to outline details of the deal to members in late September, with a vote scheduled to be held on 20 October. That vote will need to be passed by 75% of members voting at present, and also by 50% of total shareholders.
The regulatory process, overseen by New Zealand’s Overseas Investment Office, is expected to be completed by December, allowing the deal to close by the end of 2025.
The investment would see Alliance co-op own 35% of the new entity and Dawn Meats own 65%, leaving the co-op in a similar position to where Kerry co-op found itself in the wake of the stock-market flotation of Kerry Group in the 1980s.
If approved, the proceeds from the transaction would see Alliance use the majority of the capital injection to reduce its debt levels, which stood at more than NZ$200m (€102m) in the group’s most recent annual financial report for the year ended September 2024.
Deal makes sense for both sides
For Alliance, the deal makes sense for more than the obvious financial reasons. The company already has a longstanding relationship with Dawn, with the processor the largest retail packer of New Zealand lamb in the UK. Dawn CEO Niall Browne said that Dawn “have worked closely with Alliance for many years”.
The Dawn investment means that Alliance can essentially eliminate its debt overhang, which has increased short term pressure on the co-op. But the advantages for Alliance are more than financial, with Dawn’s strong position in beef in Europe and the UK potentially increasing sales opportunities on this side of the world.
For Dawn, there are several strategic advantages highlighted, including the ability to create a year-round supply for customers both in the northern and southern hemispheres. The deal puts Dawn in a strong position to take advantage of the UK market’s openness to imports from New Zealand following generous tariff-free quota agreed in the post-Brexit trade deal. There should also be fresh opportunities for Dawn to increase exports to markets in Asia and North America through Alliance’s existing channels.
It is not mentioned in the press release from the companies, but an important factor for Dawn could be the significant price differences which have widened between the prices of Irish and New Zealand beef and sheepmeat in recent years (see Figures 1 and 2). If high-quality product can be sourced at a price where it makes financial sense to ship it halfway around the world, then Dawn will be in a competitive position when it comes to maintaining market share in the UK and Europe.
It remains to be seen what this will mean for prices for Irish farmers. It is unlikely that this deal will have a huge effect in the short term, but greater openness in the UK and EU as a result of trade deals will ultimately create more competition.
Dawn’s ambitions
This deal is not the first time Dawn has looked at an investment on the other side of the world. The company was reportedly in the mix to invest in New Zealand’s largest red-meat processor, Silver Fern Farms, a decade ago. Around the same time, Dawn took a 49% stake in Elivia, the meat-processing arm of French co-op Terrena. The company announced in June 2023 that it was selling its interest in the joint venture.
Dawn’s growth strategy has generally been focused on processing in Ireland and the UK, where several smaller deals were completed in the years to 2015. The signing of a strategic agreement with Dunbia in 2017, and the eventual taking of full control of the operation in 2020 was a major step in this expansion process. Last year the company completed the acquisition of Kildare Chilling.
In its sales pitch to members, the board of Alliance made reference to Dawn’s “balance sheet power” which suggests that the company remains in a strong financial position. Given the pace of recent acquisitions and presuming the company still has some financial fire-power, the investment in New Zealand may not be the end of the Dawn’s expansion-through-acquisition plans.
Comment
The proposed deal between Dawn and Alliance makes sense for both parties on several levels. While Alliance came to the table through financial need, the tie-up with Dawn should also provide value from both a market and expertise access standpoint.
For Dawn, it is a major step to manage a distant business which will obviously come with its own challenges. However, with imports to the key UK market growing, getting in the ground floor certainly seems like a good move for the Irish processor.
More broadly, there is a wider theme at play here for Irish meat processors. For years there have been rumours and speculation that one of the big three of Irish red-meat processing could become a takeover target for one of the large American companies. However, the industry consolidation we have seen, led by Dawn, ABP and Kepak, and the expansion by those companies of their own international footprint, could mean that rather than being a takeover target themselves, they will remain buyers of global meat processors.
However the future of the industry turns out, it is clear that the trend of fewer, larger, processors is set to continue. If they manage to remain Irish-owned, then that, at least, should be some good news for Irish farmers.
In brief:
Dawn to invest €128m in New Zealand processor.Deal is subject to shareholder approval.Dawn would control 65% of Alliance. First southern hemisphere deal for Irish processor .Trend for industry consolidation continues. The subhead was updated on 14 August to clarify the scope of investment.
It was confirmed this week that Dawn Meats is set to invest NZ$250m (€128m) to acquire 65% of New Zealand’s Alliance Group.
The board of the red meat co-operative unanimously recommended the offer to farmer shareholders who will vote on the proposal in October.
Alliance Group chair Mark Wynne described the Dawn bid as a “very compelling offer”. The co-op announced that it was seeking outside investment at the end of 2024.
Initial interest was high, but when they were considered against pre-determined criteria, the number was whittled down to six, then three and finally to the recommendation for the Dawn bid.
“Across our criteria, Dawn Meats was by far the best offer,” Wynne said.
The proposal will need to get approval from members and from regulators in New Zealand. Alliance will start a series of roadshows to outline details of the deal to members in late September, with a vote scheduled to be held on 20 October. That vote will need to be passed by 75% of members voting at present, and also by 50% of total shareholders.
The regulatory process, overseen by New Zealand’s Overseas Investment Office, is expected to be completed by December, allowing the deal to close by the end of 2025.
The investment would see Alliance co-op own 35% of the new entity and Dawn Meats own 65%, leaving the co-op in a similar position to where Kerry co-op found itself in the wake of the stock-market flotation of Kerry Group in the 1980s.
If approved, the proceeds from the transaction would see Alliance use the majority of the capital injection to reduce its debt levels, which stood at more than NZ$200m (€102m) in the group’s most recent annual financial report for the year ended September 2024.
Deal makes sense for both sides
For Alliance, the deal makes sense for more than the obvious financial reasons. The company already has a longstanding relationship with Dawn, with the processor the largest retail packer of New Zealand lamb in the UK. Dawn CEO Niall Browne said that Dawn “have worked closely with Alliance for many years”.
The Dawn investment means that Alliance can essentially eliminate its debt overhang, which has increased short term pressure on the co-op. But the advantages for Alliance are more than financial, with Dawn’s strong position in beef in Europe and the UK potentially increasing sales opportunities on this side of the world.
For Dawn, there are several strategic advantages highlighted, including the ability to create a year-round supply for customers both in the northern and southern hemispheres. The deal puts Dawn in a strong position to take advantage of the UK market’s openness to imports from New Zealand following generous tariff-free quota agreed in the post-Brexit trade deal. There should also be fresh opportunities for Dawn to increase exports to markets in Asia and North America through Alliance’s existing channels.
It is not mentioned in the press release from the companies, but an important factor for Dawn could be the significant price differences which have widened between the prices of Irish and New Zealand beef and sheepmeat in recent years (see Figures 1 and 2). If high-quality product can be sourced at a price where it makes financial sense to ship it halfway around the world, then Dawn will be in a competitive position when it comes to maintaining market share in the UK and Europe.
It remains to be seen what this will mean for prices for Irish farmers. It is unlikely that this deal will have a huge effect in the short term, but greater openness in the UK and EU as a result of trade deals will ultimately create more competition.
Dawn’s ambitions
This deal is not the first time Dawn has looked at an investment on the other side of the world. The company was reportedly in the mix to invest in New Zealand’s largest red-meat processor, Silver Fern Farms, a decade ago. Around the same time, Dawn took a 49% stake in Elivia, the meat-processing arm of French co-op Terrena. The company announced in June 2023 that it was selling its interest in the joint venture.
Dawn’s growth strategy has generally been focused on processing in Ireland and the UK, where several smaller deals were completed in the years to 2015. The signing of a strategic agreement with Dunbia in 2017, and the eventual taking of full control of the operation in 2020 was a major step in this expansion process. Last year the company completed the acquisition of Kildare Chilling.
In its sales pitch to members, the board of Alliance made reference to Dawn’s “balance sheet power” which suggests that the company remains in a strong financial position. Given the pace of recent acquisitions and presuming the company still has some financial fire-power, the investment in New Zealand may not be the end of the Dawn’s expansion-through-acquisition plans.
Comment
The proposed deal between Dawn and Alliance makes sense for both parties on several levels. While Alliance came to the table through financial need, the tie-up with Dawn should also provide value from both a market and expertise access standpoint.
For Dawn, it is a major step to manage a distant business which will obviously come with its own challenges. However, with imports to the key UK market growing, getting in the ground floor certainly seems like a good move for the Irish processor.
More broadly, there is a wider theme at play here for Irish meat processors. For years there have been rumours and speculation that one of the big three of Irish red-meat processing could become a takeover target for one of the large American companies. However, the industry consolidation we have seen, led by Dawn, ABP and Kepak, and the expansion by those companies of their own international footprint, could mean that rather than being a takeover target themselves, they will remain buyers of global meat processors.
However the future of the industry turns out, it is clear that the trend of fewer, larger, processors is set to continue. If they manage to remain Irish-owned, then that, at least, should be some good news for Irish farmers.
In brief:
Dawn to invest €128m in New Zealand processor.Deal is subject to shareholder approval.Dawn would control 65% of Alliance. First southern hemisphere deal for Irish processor .Trend for industry consolidation continues. The subhead was updated on 14 August to clarify the scope of investment.
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