Proposed Dawn Meats buyout threatens Alliance’s co-op status

Thursday, 14 August 2025

The chairperson of Alliance Group says the proposed sale of a controlling stake to Ireland’s Dawn Meats is the only realistic path to secure the meat processing co-op’s future, as farmer-shareholders prepare for a mid-October vote.

“This is a critical moment,” Mark Wynne told The Post. “We’ve spent two years resetting and recapitalising the business. Without this investment, we face asset sales, site closures, and further cost cuts just to meet our banking requirements.

“We want to be very clear that we're not threatening or scaring anybody. We're just putting it out there, that that is a probability.”

This week, the company announced plans to sell a majority 65% stake to Irish-owned Dawn Meats; to do so it needs the backing of 75% of its shareholders. The make or break meeting is set for October 20, but before that, the company needs approval from the Takeovers Panel, the High Court and the Overseas Investment Office (OIO).

The $250 million deal valued Alliance at $502m, and would slash $200m from the co-op’s financing and expedite upgrades while allowing a potential $40m return to members.

The deal emerged as the company sped towards a September deadline from its bank to find funding after starting a capital raise last April. It was currently paying about $36m a year in interest.

The initial amount sought was $160m in 2024 for the raise which was now at a minimum of $200m, which was needed by September 30.

If approved, Alliance would retain 35% ownership but would see its board slashed from nine to five members, three of which would be from Dawn Meats.

Ultimately, it would mean the farming co-operative could move away from being fully farmer owned.

Talking to The Country this week, NZ First leader Winston Peters said selling Kiwi-owned assets offshore like Alliance, and previously sold-off Silver Fern Farms, was a “fraud” and that Alliance management should be grilled on their “commercial incompetence”.

“We should be looking to own and maximise value for our country and workers. In our view, it’s a serious mistake,” Peters said, hoping the decision would fall through at the OIO stage.

Peters did not respond on the matter when approached by The Post, but Trade Minister Todd McClay said in a statement the Government encouraged all shareholders to attend information sessions and participate in the vote.

“This is ultimately a decision for Alliance’s farmer-shareholders. It’s important they have all the information and make the choice they believe is in the best interests of the co-operative and its suppliers,” McClay said.

Foreign ownership the only option

But Wynne said selling offshore was the co-op’s only option after farmers weren’t able to inject cash into the business at its capital raise last year.

“Farmers have every right to ask the hard questions,” he said. “But the alternative is a weaker, smaller Alliance in a market that’s only getting tougher.”

At the end of September 2023, Alliance made a $70m loss at the full year on the back of dropping commodity values combined with rising costs, debt pressures and an urgent need for plant upgrades.

That led the board to approve a capital raise last April where farmer-shareholders were asked to return $3 per livestock unit processed, with an increase in required shareholding from 12 to 16 shares per livestock.

At the time, and again this week, Wynne said it was “probably the worst time you could ever do a capital raise”: “Our farmers were really hurting, prices were low, and at the same time that they're hurting, Alliance was hurting, and our only source of capital is from our farmer shareholders.

“Through that process with our farmers, we had over 40 meetings through the middle of last year, and made it clear that our first preference is to remain 100% farmer-owned, but if our current farmer shareholders either can't or won't put in enough money to solve our debt problem, then we'll go to a joint venture.”

By the end of the year, the company tapped Craigs Investment Partners to kick off an external capital raise.

After narrowing down about 50 potential investors, Wynne said it landed on a deal with Dawn Meats, with which Alliance had been working for the last decade. He said Alliance planned to take advantage of the company’s advanced beef boning and processing innovations in place overseas.

Meanwhile Dawn Meats had the opportunity to capitalise on Alliance’s lamb processing intellectual property that would support more of Dawn’s growth into the Chinese market.

“This isn’t about cashing out. It’s about having the balance sheet strength to compete globally,” he said.

The final plan would see Dawn Meats operating the company with farmers’ shares moved to Alliance Investment Co-op (AIC) on a one-for-one basis. AIC would be a minority shareholder of Dawn Meats and listed on the USX.

The new co-op board would have three farmer-elected directors and up to two independent members. Wynne said the joint venture would have rules in place requiring all five board members to unanimously agree on major decisions, principally the annual budget, business plan, asset management and related party transactions.

A make-or-break vote

On Tuesday, the company announced the plan to its shareholders which drew an audience of about 430, Wynne said.

He did not provide details on farmer feedback but said shareholders supplied questions through an online portal. The company was currently in the legal process to get the deal approved by the Government’s Takeovers panel, after which it would head to the High Court to approve its new scheme of arrangement, and would go the OIO.

Wynne said Northington Partners would conduct its independent shareholder review following that process. After that, Wynne said, Alliance would kick off a two-week roadshow, with plans for roughly three meetings a day “travelling up the country to engage, answer their questions, make clarifications”.

Then shareholders would get to vote at an Invercargill meeting on October 20.

The deal would only go through if at least 75% of shareholders and more than 50% of total shareholding votes backed the move. But if it didn’t go through, the board would have to follow a bank-led process that could involve removing investments and restructuring the business.

“That has all potential ramifications from loss of shareholder equity, potential asset sales, breakup, no working capital facility,” Wynne told The Post.“It's a very bad space.”

“We wanted our farmers to focus on the options that they have and support what we consider to be a really good proposal from Dawn Meats.”

Dawn Meats’ pitch

Founded in 1980, Dawn Meats processes over 3.5 million sheep and one million cattle annually, operating 24 facilities in 10 countries with turnover exceeding $5.8 billion. Chief executive Niall Browne says the partnership would create a “dynamic industry competitor” leveraging year-round supply between the Northern and Southern hemispheres.

Farmer roadshows and information sessions are planned before the vote. Industry analysts say the outcome will be closely watched across the primary sector, where several co-operatives are facing similar pressures to raise capital without losing control.

If passed, the Dawn Meats deal would mark one of the most significant restructurings in New Zealand’s meat industry since the 1980s — and a decisive shift in Alliance’s ownership model.