Farmers vote 94pc for sale of Westland

Westland Milk Products’ farmer shareholders have voted strongly in favour of the $588 million acquisition offer from Chinese company Yili Industrial Group.

About 430 farmers were eligible to vote, making up 2775 votes. They voted 94 per cent in favour.

For the deal to pass, it needed 75 per cent shareholder support and also had to be approved by shareholders holding more than 50 per cent of the eligible shares.

The offer was made by Hongkong Jingang Trade Holding, a wholly-owned subsidiary of Inner Mongolia Yili, which is the largest dairy company in China.

The deal now needs approval from the Overseas Investment Office and from the High Court, with the final court hearing scheduled for July 18.

Yili has stated it is ‘‘not subject to any state control or direction’’, although 25 per cent of the company is owned by the Chinese Government.

Westland Milk chairman Pete Morrison said shareholders had shown strong support for the proposal.

‘‘This proposed transaction will secure a competitive milk payout for at least 10 seasons for all of our existing shareholders . . . The offer of $3.41 per share is significantly higher than the independent adviser’s valuation range [of] $0.88 to $1.38 per share and the milk supply commitment ensures a minimum price for 10 seasons of at least the Fonterra farmgate milk price,’’ he said yesterday.

‘‘The board recognises that the vote is an important milestone in Westland’s history.

‘‘While Westland will cease to be a co-operative, the board believes the proposed transaction represents the best available outcome for shareholders.’’

Westland is the largest employer on the West Coast. Its headquarters are in Hokitika, where 550 staff work.

At $3.41 each, the shares are worth more than double the $1.50 they have traded at for years.

For the average-sized supply farm, the share offer translates to a windfall of about $500,000.

The sale has been surrounded by controversy, with claims of top management having a conflict of interest because they will collectively pocket well over $1m if the deal goes through.

However, that has been rejected by Morrison, who said the bonuses were negotiated before the offer was made last year by Yili.

The largest shareholder is corporate farmer Southern Pastures. Last year it paid $6m for its shares; following the sale it will receive more than twice that amount.

However, Southern Pastures announced last week that it would abstain from voting on the deal.

Landcorp stands to gain a windfall of about $11m from the sale, but has not revealed its voting stance.