Mega merger abandoned
18 August 2000
Mega merger abandoned
By Tamarind Davidson
SCATS and Countrywide Farmers have abandoned plans to merge following agreement by both sets of directors. The move would have created the biggest farmer-controlled business in the UK.
"We have achieved a number of benefits already," says Ian Smith, managing director of CWF. "A move towards a full merger didnt justify the additional costs that would have been incurred.
"I believe the benefits are to be achieved in the purchasing and distribution areas. We will continue to work together to strengthen our buying power and secure mutual economic benefits in both areas.
"Obviously by not coming together there wont be all the corporate benefits, but we wont incur the huge costs and other tax expenses which, at the moment, outweigh the potential benefits and diminish shareholder value."
Shareholders have been fairly pragmatic about the situation, says Tim Pollock, SCATS group managing director. "If we went ahead then it wouldnt be in their best interest, so they have agreed that it is correct not to proceed."
The move was on course back in June when SCATS and CWF sold 60,000t of pig and poultry tonnage to BOCM Pauls. This followed an exchange of the two companies grain and compound feed businesses to create two separate specialist enterprises.
Potential problems arose following recent meetings with tax officials, says Mr. Pollock. "Until everything is finally signed there is always a risk that something could happen," he adds.
"They were absolutely right to investigate the options that would give them the best possible benefits," says Paul Ibbott of the NFU.
"Both companies have a very strong balance sheet and continue to push forward. They have made several important moves already but success is not just about being big. The financial outcome and value to shareholders are vital." *