Waterford-based Dawn Meats has emerged as the front-runner to take a controlling stake in New Zealand’s Alliance Group, a farmer-owned co-operative that describes itself as the world’s biggest exporter of sheep meat.
This is the Irish company’s second tilt at a major acquisition in that country’s meat industry in a decade.
Alliance refused to confirm details of the offer, which still faces a shareholder vote and possible political hurdles, although The Irish Times understands the bid involves a payment of NZ$270 million (€140 million) for a 70 per cent stake in the co-operative.
A meeting of co-op members is planned for August 12th to update them on the process, sources said.
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It is understood that Dawn Meats has pulled ahead of several rival NZ meat exporters and the Saudi Public Investment Fund-owned SALIC after Alliance called for non-binding indicative offers in February.
Headquartered in Invercargill in South Island and owned by its 4,216 farmer suppliers, Alliance began looking at recapitalisation options last year after racking up pretax losses of more than $200 million in 2023 and 2024 and breaching its banking covenants.
A potential injection of between $100 million and $140 million, largely from compulsory deductions from livestock payments to farmers, was ditched in December after being poorly received by shareholders.
By then, Alliance had hired an investment bank and begun its search for external capital.
Like most NZ meat exporters, Alliance has been hit by declining livestock numbers, brought on by several years of poor farmer returns and a subsequent rush by farmers to plant their properties out in pine trees to earn carbon credits tradable through the country’s emissions trading scheme.
With fewer animals, exporters engaged in a bidding war for livestock to keep their processing plants full and running efficiently. Profit margins came under pressure as returns in export markets failed to keep pace.
Losses at the country’s largest meat exporter, Dunedin-based Silver Fern Farms, totalled $66 million in 2023 and 2024. However, with interest-bearing debt of just $3.45 million at the end of December, compared with $220 million at Alliance at its September balance sheet date, the former 100 per cent farmer-owned co-operative is on a sounder financial footing, having previously accepted Chinese investment.
One key figure in that deal in 2016 told The Irish Times that Dawn Meats was an underbidder to Shanghai Maling’s $267 million investment in 50 per cent of Silver Fern Farms.
If successful this time, Dawn Meats will be buying into NZ’s third-largest meat exporter, with revenues last year of $1.77 billion, down from $2.03 billion in 2023. It has a network of eight processing plants, including three beef plants.
However, large-scale shareholder David Pinkney said a sharp turnaround since the start of the year in key lamb markets in the UK and the EU had lifted confidence among shareholders that the co-op could trade its way out of its difficulties without external capital.
Higher livestock prices meant farmers were now reconsidering the co-op’s earlier call for capital.
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Even if it wins over Alliance’s shareholders, divisions within the government could still thwart Dawn Meats’ second attempt at gaining a foothold in the $9.8 billion New Zealand meat export industry.
While the economically liberal National and ACT parties could be expected to wave through a shareholder-backed offer for Alliance, support from their nationalist governing partner NZ First looks less certain.
NZ First MP and rural affairs minister Mark Patterson, who is also an Alliance shareholder, told The Irish Times his party would “more than raise an eyebrow” to a controlling stake in the country’s last remaining 100 per cent farmer-owned red meat exporter being sold overseas.
“There is a political hurdle that needs to be cleared,” he said.
When contacted, Dawn Meats said it has a policy of not commenting on market speculation.
