An agtech deal which would’ve seen one of New Zealand’s largest agribusinesses go global has been killed off due to the Covid-19 pandemic.
The New Zealand company – which is a cooperative owned by Kiwi dairy farmers – made a bid of $70 million for 50% of Afimilk back in February.
Speaking at the time, LIC chairman Murray King said the investment would give the cooperative access to data to improve dairy outputs – including “data on other farming methods beyond pastoral held by Afimilk” – while also granting it a wider global footprint.
“It’s vital we keep our world-leading edge in pastoral dairy farming data, while broadening access to new information to meet future needs and challenges. The investment in Afimilk will do both,” he said.
But when the deal was put to LIC shareholders yesterday, 70% voted it down. A minimum of 50% votes in favor was required for the acquisition to go ahead.
King suggested in a statement released today that market concerns in the wake of Covid-19 had influenced the shareholders’ decision.
“When we announced this proposal, no one could have foreseen the rapid and unprecedented impacts of Covid-19,” he said.
The cost of the deal in local currency had ballooned from NZ$109 million to NZ$118 million due to foreign exchange fluctuations.
King added that LIC will continue to seek out “strategic opportunities,” but its immediate focus would now be “supporting [its] shareholders as they navigate their farming businesses through the challenges of the next few months.”
Hamilton-based LIC was established in the early 20th century by Kiwi dairy farmers to carry out herd testing. It later moved into research and development around cattle genetics.
In 2016, the cooperative underwent restructuring which saw it separate its herd improvement and agritech businesses. Since then it has been refocusing its strategy around “innovation-led growth,” and the Afimilk proposal likely signalled a move towards more activity on the mergers, acquisitions, and investments front.
Afimilk has roots in the Israeli kibbutz movement, and in recent years has become one of the world’s leading providers of milk meters, cattle behavior sensors and ‘smart collars’, and farm management software for dairy farmers.
According to LIC, Afimilk is profitable, and made revenue of $57.4 million in 2019.
AFN has contacted LIC and Afimilk for comment, and will update this article as necessary.