Former directors endorse merger
Six former Farmlands directors have banded together to support the proposed merger with South Island farm-supply counterpart CRT.
"We have all read and considered the proposed merger documents sent to all shareholders and reviewed the supporting documents on the Farmlands website," the men said.
The former directors are John Hathaway (Bay of Plenty), who served from 1987-2005, Sam Robinson (Hawke's Bay) 1996-2008, Ross Linklater (Manawatu) 1996-2011, Roger Barton (Wairarapa) 1998-2010, Dennis Munro (Gisborne/Wairoa) 2002-2011, Steve Wyn-Harris (Hawke's Bay) 2003-2012.
"We all strongly believe that this is a sound proposal with good commercial merits and each one of us will be voting in favour of the merger.
"Five of us were members of the Farmlands board when it considered a potential merger with CRT six years ago. At that time, Farmlands' market share of the rural supplies business was 12 per cent and we believed then it was in the best interests of Farmlands' shareholders to instead concentrate on the gains that could be had in the North Island first.
"With a change in strategic positioning and an excellent management team, within five years this market share grew from 12 per cent to 27 per cent and sales went from $360 million to $773 million.
The directors said the landscape had changed, with further industry rationalisation and growth in the size of suppliers.
"We believe that the company is now positioned very well to consider an option such as the proposed merger," they said. "The current board has not sought our public support for this potential merger between Farmlands and CRT and the initiative of this letter is ours alone."
Two member-elected directors of rural co-operative Farmlands resigned in protest over the proposed merger. Charlie Pedersen (West Coast, North Island) and Hugh Ritchie (East Coast, North Island) said, as the two largest-transacting directors on the Farmlands board, they did not believe members had all the information to make a fully informed decision.
They said the co-operative's members should know the board was unanimous on the proposal, no agreement had been reached as to how members would be represented and a consultant who had driven the merger process stood to receive a significant success fee if the merger went ahead.
Farmlands chairman, Lachie Johnstone, said the board would make a recommendation on a representative structure when it was appropriate.
He said the numbers for post-merger savings had been independently assessed by two parties.
