murray goulburn boss gary helou on attack, page-2

Hi ferrymanau

Your last comment is the key. How do we sort out this mess, both in the best interests of dairy farmers & non farmer shareholders, and what’s best on national interest grounds to create a world class, competitive and sustainable dairy industry.

The non farmer shareholders are rightly concerned about losing their $9 value. The longer this drags on, the greater the chance of the share price dropping, so there aim is to sell to the most convenient and guaranteed purchaser. They have no interest in how it will affect farmers long term. That’s fine.

You have 2 current options, the only one with any real certainty is Bega’s. But to extract the total value you’d have to dump Bega’s shares as quickly as possible. That would be hard if the trickle turned into a flood. Bega’s on a win-win but in reality I don’t think they want to win because at the moment they’re just sucking in shares for $2 with a face value of $9. They’re the wild card. They could sell out to either of the parties at the drop of a hat. So, with that control, they would be the ones that would be prepared to wait for MG to go through the drawn out regulationary process.

Time is what we don’t have and that’s what farmers and the industry really needs. Non farmer shareholders need certainty that they won’t lose any value as this process proceeds. Basically, farmers need to their head around why we need to merge these 3 companies for their benefit, discuss why competition between suppliers doesn’t drive milk price and other industry issues. Only farmers with a plan can have a dialogue with the government about creating that future. MG’s the foundation stone of the new entity. It has already committed to paying $9/share and if it’s truly committed to buying WCB at this price, it needs to make statements to that effect that even if Saputo walk away and the share price does drop that they will purchase the outstanding shares at that price. The problem is that this is not just a simple takeover in the normal sense. The normal commercial process will take its course unless our industry bodies and farmers speak up and ask for a different outcome.

For the Aus dairy farmers’ benefit we really need a merger of all 3 companies. It will make up for all the mistakes and lost opportunities that have plagued this industry for the last 20 years. The lack of a plan and vision for this industry is a lost opportunity with all the various parties hiding behind state borders, not willing to work together. I do see a way forward but it will only happen if our state farmer organization is willing to champion this plan and challenge the 2 Aus bidders to hold off on their bids on national interest grounds if their rhetoric is to be believed that this industry needs to be rationalised for the benefit of all parties. At the same time it has to be made clear to those that have a financial stake in WCB and Bega that after this process has taken place the takeover price will be guaranteed. That’s the only way that we will be able to achieve the best outcome for dairy farmers. We need the UDV to approach MG, Bega and the government to discuss a better way forward, and in the process guarantee the value of the share price to the shareholders.
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So no one really knows what’s going to happen in the next few weeks but your question is at the core of what will play out.