There was overwhelming support from Alliance shareholders in support of the deal which will see Dawn meats take a 65% stake in the business in return for a NZ$270m (€132m) investment.
To get the deal over the line, a 75% majority of the shareholders that voted was required and over 50% of shareholders had to have voted.
In the end, 2,675 shareholders cast a vote, representing 92,495,558 shares or more than 88 per cent of all shares on issue.
Of these, more than 87 per cent voted in favour of the proposal, meeting the threshold required under the Takeovers Code.
After the vote was announced on Monday night, Tuesday morning in New Zealand, Niall Browne spoke to the Irish Farmers Journal about what this deal will mean for the business and Irish farmers.
When asked is this good or bad news for Irish farmers, Browne was quick to emphasise that he sees this as a “win-win deal” and that “it will open new routes to market, particularly the US and Canada, that we don’t currently have”.
He also explained that it isn’t just about market access. He has learned of ways of better utilising what would be described as by-products in processing and that this knowledge would be brought to the Dawn and Dunbia businesses in Ireland and the UK.
Learning from each other
Browne also spoke of the deal as being “a very strategic investment, the world demand for red meat protein is growing while numbers are going down in Europe. Our customers need an assured supply line, we need to have it when they want it”.
We have a bespoke management and information system that we will be sharing with Alliance so we will be able to compare plants in Ireland, the UK and New Zealand
As for what the businesses will get from it, Browne said that there are great synergies between the groups and that they can learn from each other. Using the example of sheep processing, he said that “they are way ahead of us in Europe with automation” and he included the Dawn factories in that.
However, when it comes to beef, he said that it is the other way round and that “we will be able to help them with their beef processing”. The Alliance business has six beef and lamb factories, with capacity to process six million sheep annually and 500,000 cattle, plus a modern venison processing unit that can handle up to 100,000 deer each year.
In terms of what Dawn will bring operationally to Alliance, Browne explained: “Just as we did with Dunbia, we will be standardising how we run the business, it will be comparable with what we do in Ireland as well.”
When pressed to elaborate further, he added: “We have a bespoke management and information system that we will be sharing with Alliance so that we will be able to compare plants in Ireland, the UK and New Zealand.”
Market synergies
When Browne was asked about the extent to which Alliance beef and sheep meat would grow sales in the UK, he replied that “there has been New Zealand product going into Britain for over 100 years”.
However, he was keen to point out that it wasn’t just the UK and Europe that he was looking at as new market for Alliance beef and sheep meat.
He said: “Some of our customers are global customers and by us having this new supply line, we may go into countries that Irish or British product doesn’t currently go into.”
When pressed to say what customer he had in mind, he refused to elaborate, but as Dawn Meats is a major supplier of McDonald’s in Europe, it wouldn’t be a surprise if we see product from Alliance in McDonald’s outlets elsewhere in the world at some point.
In it for the long term
Back in 2017, Dawn entered a partnership with Dunbia and three years later Dawn bought out their partners, the Dobson family, who had founded the Dunbia business.
Browne explained that “this particular deal in the UK was set up with that option available to the other shareholder whereas this deal is set up for the long term”.
He also emphasised that the Alliance brand is a very proud brand and that it will be continuing as it has been into the future as part of the strategic partnership.
Alliance enthusiastic about deal
Given the pressing need for the cash injection into the business, it is no surprise that the Alliance board was relieved at the decisive vote to support the deal, despite the emergence of opposing voices recently.
Mark Wynne, chair of the Alliance Group, described it as “essential investment [which] will strengthen our financial position, enhance our operational capability and enable us to capture more value in [the] market”.
He also described it as “combining Alliance’s lamb expertise and global reach with Dawn Meats’ strength in beef and market access across Europe and the UK”.
Wynne also highlighted the long term intention for the partnership saying that it gives “farmer-shareholders the opportunity to see the value of their residual 35 per cent stake grow over the long term”.
Comment – necessary deal for Alliance, opportunity for Dawn
For Alliance, the deal was a no-brainer; they had been looking for an investment partner and there didn’t appear to be any better options than the Dawn proposal available.
It was interesting to hear Niall Browne speak of it being a two-way exchange of information and it is clear that he has learned more about lamb processing from his close analysis of the Alliance factories.
We can expect that to be transferred into the UK and Irish factories in due course.
The New Zealand trade deals with the UK and EU open the door for New Zealand beef and lamb at preferential tariff rates and zero tariffs in the UK
He is also correct in what he says about supply and rising global demand for red-meat protein.
The New Zealand trade deals with the UK and EU open the door for New Zealand beef and lamb at preferential tariff rates and zero tariffs in the UK.
Irish companies have been trying to break into the US market for over a decade with little success; we will be watching the export statistics to see if we make progress there. There is lots of opportunity for Dawn in the Alliance partnership where they are the senior partner.
However, aligning the businesses won’t be as easy as it was with Dunbia, given the distance and different customer portfolios. It has all the ingredients for success and only time will show how well they blend together.