Why Dale Farm and Aurivo pulled the plug on merger talks

After months and months of discussions and many, many meetings north and south the prospect of a fully blown merger between Dale Farm and Aurivo is now back on the shelf.

If Nick Whelan, Dale Farm’s group CEO and outgoing Aurivo CEO, Donal Tierney, are disappointed in the outcome they appear to be hiding it well because now it is all about the co-ops new “all-island strategic partnership”.

Both men firmly believe that the previously proposed merger between the Belfast headquartered co-op and Sligo headquartered Aurivo would have comfortably secured the “required 75%” support from members that it would have needed to go ahead.

However Tierney told Agriland that they just did not what to get the minimum 75% – instead what they wanted was a “hearts and minds” buy-in of the then proposed merger.

“We want 90 plus per cent – you want to get it with a very comfortable majority and 75% is a high hurdle.

“To get the 90% plus, I think, you need to need to win hearts and minds and we did have a proactive no camp.

“To win them, over we think we can demonstrate the benefit of collaboration by working on this strategic partnership, which will take place over the next number of years.

“There’s no commitment at the end of that, that we will enter a merger or a joint venture. That’ll be revisited down the road or maybe not,” he added.

According to Nick Whelan “time is on our side” for both co-ops in relation to the prospect of any potential merger or joint venture in the future.

“Both businesses actually don’t have a problem.

“There isn’t a deadline for both of us doing this, we are fortunate in that. There’s no bank covenant pressures, there’s no debt pressures, there’s no performance pressures both businesses are fine and dandy and stable.

“But if we give it more time, we’ll get more support, and more support is important. What we’re trying to sell is an opportunity in the future, as opposed to a problem in the present,” Whelan added.

According to Tierney what he also hopes will happen is that members of both co-ops will in time “see the merits of working together, through this strategic partnership” and that ultilmately this will deliver a “better milk price” for them.

Merger shelved

Although the proposed former merger may be shelved, according to both Tierney and Whelan there is now strong momentum behind the co-ops new all-island strategic partnership.

From day one of this new partnership they intend that there will be a clear focus on “availing of each other’s capabilities and technologies”.

The immediate next stage is that a legal contract will be agreed on between the co-ops within the next month and then it is down to work on three specific projects that both co-ops have already identified.

Whelan is keen not reveal all the cards on this front but what he did tell Agriland was that this will primarily be about “value added proteins”.

There will also be two other new product developments that they will work on, one of these will be around buttermilk and the other will be around whey pemerate.

“They are quite technical and they will need a bit of co-investment, they will need new people and a formal structure – they are big projects,” Whelan added.

This will in turn translate into products moving from Dale Farm to Aurivo particularly in relation to its spray dryer facility in Ballaghaderreen.

In the meantime Nick Whelan is also determined to make sure that Aurivo’s shareholders know exactly who and what Dale Farm is about.

He said one of the big lessons that he has taken away from the last few months is “how little” Aurivo shareholders knew about Dale Farm.

Whelan added: “They knew virtually nothing about us – about the type of co-op we were, how we conducted ourselves, our performance, what we did even – we’ve a big job to do in how we position ourselves in the hearts and minds of the southern farmer. About our co-op credentials, about how we conduct ourselves as a co-op and our engagement.

“It is also about our performance, our performance consistently on milk price and operating margin and investment levels. We’ve got a job to say this is a real co-op, they listen to their farmers, they’re serious people”.

.editor-styles-wrapper .wp-block-acf-related-stories-block {
max-width: 960px !important;
background-color: var(–color-gray-default);
padding-inline: 40px;
padding-top: 8px !important;
padding-bottom: 20px !important;
}