Former directors back deal

Former farmer directors of the rural co-operative Farmlands Trading Society are supporting the proposed merger with the South Island cooperative CRT, saying it makes economic sense.

Two directors resigned, Charlie Pedersen (West Coast, North Island) and Hugh Ritchie (East Coast, North Island), because they do not support the merger and say it is not in the best interests of Farmlands’ members.

But six former directors have joined forces, saying the board considered a merger with CRT six years ago. At that time Farmlands had only 12 per cent of the market and they believed it was in the best interests of the co-operative to concentrate on gains in the North Island.

Former director Manawatu farmer Ross Linklater said it had grown to 27 per cent of the rural market since then and said former directors, including him, John Hathaway, Sam Robinson, Roger Barton and Steve Wyn-Harris believed the company was now well placed for the merger.

‘‘If you look at the history of Farmlands, a series of amalgamations is how it has grown. Likeminded organisations have joined and we have a bigger buying group, with the aim of reducing farm inputs. And CRT in the South Island has a similar background.’’

He says the next logical step is to see them merge. ‘‘I retired from the board of Farmlands in November 2011, and initial discussions looked encouraging then. There has been much more in-depth analysis done since and we’re told there is a $38 million saving over three years. So that’s significant.’’

He says it will be business as usual for members as all stores will stay open, and staff will remain.

‘‘So the overall savings will be back office ones, such as IT and increased buying power.’’

The six former board members are encouraging all shareholders to read the documents and go to meetings and vote.

Pedersen and Ritchie said they were the two largest-transacting directors on the Farmlands board.

‘‘Members need to be aware, there are some very serious issues in the documentation and we strongly urge all members to carefully read, and question in detail the proposed merger documents.’’

CRT has more than 30 stores in the South Island on top of real estate, grain and seed and feed businesses, a card service and national fuel distribution arm.

Farmlands has a strong horticulture division, card, fertiliser and fuel sales and more than 40 stores.

CRT posted a $13.15m profit in the last trading year with Farmlands due to release ‘‘healthy’’ results soon.

Members of both co-operatives will vote in two phases, on February 12 and 27. The first vote needs 75 per cent support to take the merger further. The second vote requires 50 per cent support for it to proceed.