Merger gets level headed assessment

A report by international consultancy Arthur Andersen shows the New Zealand Dairy Group (NZDG) and Kiwi Co-operative Dairies to be of comparable value. The report was commissioned as part of a merger agreement signed by the two companies in December last year and its findings eliminate the need for one to make cash payments to the shareholders of the other. It also means that both parties will enter any new company as equal partners.
Two methodologies were used to value the companies. Under one system the NZDG was valued at 1% per share more than Kiwi Dairies, while the other analysis put Kiwi NZ$0.03 (r0.014) ahead.
When the values were expressed as a value range per kilogram of milk solid supplied by shareholders, one methodology put the NZDG r0.023 ahead and the other put Kiwi r0.018 ahead. Both these valuations were a long way from the r0.094 per kilogram of milk solid threshold that would have forced one company to compensate the shareholders of the other.