Proposed Afimilk Strategic Investment Shareholder Approval Not Received

Following a Special Meeting held today the Board of LIC wishes to advise shareholders that the proposed strategic investment in Afimilk has not received the required shareholder support to proceed.

LIC announced on 19 February 2020 that it was seeking shareholder approval to acquire a 50% stake in Afimilk, which develops and commercialises dairy farm technology and farm automation systems. The acquisition, valued at $108.7 million when announced, was conditional on a number of matters including shareholder approval.

On 23 March 2020 LIC provided an update to shareholders setting out the impact of COVID-19 on the proposed investment. LIC subsequently updated the market again on 2 April 2020 advising the exchange rate remained volatile.

LIC Chair Murray King thanked shareholders for their careful consideration of the proposal. “This was a significant, but achievable long-term strategic investment opportunity for LIC. The Board and Management team undertook a thorough and independently assessed due diligence process before recommending this investment to shareholders because it made strong commercial sense financially and strategically.

“It is vital that LIC keeps its world-leading edge in pastoral dairy farming data, while broadening access to new information to meet future needs and challenges.  

“We are in a rapidly transforming industry and to protect against disruption we will need to continue to find opportunities to protect LIC’s on-going access to pastoral dairy farming data through the increased use of in-line milk meters and animal monitoring systems (such as collars).

“Ultimately, an investment of this nature needs shareholder endorsement. The Board understands and respects our shareholders’ decision, particularly given these impacts and the wider domestic and global economic uncertainty. The market and economic volatility seen since late February saw shareholder uncertainty and nervousness about embarking on an acquisition increase through the voting period.

“When we announced this proposal, no one could have foreseen the rapid and unprecedented impacts of COVID-19 that resulted in material impacts on this acquisition, arising from exchange rate volatility, difficulty in efficient transfer of governance and risk of earnings impact for the Afimilk business.”

Of the votes received, 27.56% of shares voted for the proposal. 70.30% voted against the proposal and 2.14% abstained. For the investment to proceed, it needed to be approved by 50% or more of the votes received.

“LIC has built a strong platform for growth over the past four years with solid financial results including ensuring that the co-operative has the financial headroom to achieve innovation-led growth and we will continue to assess other strategic opportunities in the future.   

However, our immediate focus now is to ensure that LIC remains match-fit to play its role in supporting our shareholders as they navigate their farming businesses through the challenges of the next few months,” said Murray King.

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