Once the merger of dairy giants the New Zealand Dairy Group and Kiwi Cooperative Dairies is completed, the chairman-designate John Roadley has revealed that he will be focusing on international acquisitions.
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The multinational dairy giant that will be created by the merger, provisionally called Global Dairy Co., is expected to generate 20% of New Zealand’s exports and 7% of its annual GDP
Roadley stressed that it was imperative that the merger that will create the 14th largest dairy company in the world be completed on schedule, by 1 June, in order to capitalise on “acquisition opportunities” amid the current trend for dairy industry consolidation.
He added: “Rationalization opportunities exist in manufacturing, emerging markets, and you can go to places like North America where there are still multitudes of little dairy companies, like New Zealand was five years ago.”
The merger is still subject to approval by farmer-shareholders and the government, but Roadley explained that the New Zealand dairy industry needed scale to develop a business model that focuses on value-added, high margin products. He believes that the domestic industry, which controls around 30% of the global market in milk and basic dairy products, can only suffer if this scale is not achieved.
New Zealand’s dairy industry is currently focused on its target of raising earnings to NZ$40bn from NZ$9bn by 2010, and Roadley argues that acquisitions are the only way to reach this.
