TURNED DOWN

Evening Star, Issue 23351, 22 August 1939, Page 8

TURNED DOWN

AMALGAMATION PROPOSAL TWO OTAGO BUTTER COMPANIES £20,000 EXPENDITURE NOT JUSTIFIED A decision not to amalgamate with the Taieri and Peninsula Milk Supply Company Ltd. was reached by the directors of the Co-operative Dairy Company ot Otago Ltd. at a meeting yesterday afternoon, following a report submitted by the auditors. . “ The savings shown in this report from the joint auditors of the two companies do not justify an amalgamation,” said Mr W. Blackie (chairman of the Co-operative Dairy Company) when asked to-day to comment on the decision. u ln theory it was agreed that savings could he effected by amalgamation, out an examination lias convinced the directors that this merger is not possible in practice, as an expenditure of over £20,000 would have been necessary. The low savings do not warrant the shareholder suppliers of the Co-operative Dairy Company going ahead. Also, the basis of capitalisation would he most difficult, and might be a bigger stumbling-block, necessitating these shareholders receiving perhaps only 30s in the £. It was also found that on the total cream collection cost of over* £14,000 the saving was negligible. Tins is contrary to the false belief that a great deal of overlapping would take place if the two companies did not amalgamate. This is not so.

“ Of the total paid-up capital of over £52,000 belonging to the Co-operative Dairy Company one-half might have to be written off had the merger been effected. The scheme also meant the entire dismantling of one large and efficient company in Dunedin and expensive alterations and reconstruction elsewhere. Considering the circumstances from every aspect the board decided to carry on the company as usual.” » PAY-OUT SATISFACTORY.” Mr Blackie commented that personally he was satisfied that the company’s present costs could not bo lowered, and also that the pay-out was satisfactory to the company’s 1,600 suppliers. The fact that. a £IO,OOO bonus was being released at the end of this month was sufficient evidence that the suppliers’ interests were being fully considered. It was mentioned by the chairman of the board that an amalgamation would have had a decidedly adverse effect on the cold storage company here, and thus on the butter and cheese companies who wore that concern’s shareholders.

The consideration of the question of this merger was the outcome of two mootings during June between representatives of each company and the Executive Commission of Agriculture.