Targeted Share Offer and Buy-Back

Zespri has made good progress in strengthening alignment and grower ownership and control of the company through a targeted share offer and buy-back programme.

Click here to read the latest media release.

Why own shares in Zespri?

Sometimes we are asked why growers should consider owning shares in Zespri. There are a number of reasons that you should consider when making a decision, including:

  • promoting the ownership and control of the industry marketing body (Zespri)  by the growers whose kiwifruit it sells
  • improving Zespri’s ability to remain (in the majority) truly representative of kiwifruit growers when it lobbies Government on behalf of the industry and represents the industry overseas
  • The ability to share in corporate income streams (through dividends) as well as orchard gate returns (OGR).

All of these reasons come down to one concept, alignment of grower interests and shareholder interests to make the industry stronger.

When Zespri was corporatised in 2000, all exporting growers were allotted shares. At that point in time, there was near perfect alignment of interests. While other primary industry groups that have had a single desk exporter have been set up as a cooperative in a way that ensured only those that participate in the industry have the shares, the Government did not set Zespri up that way. This has led to a growing mis-alignment and resulted in some of the recommendations growers voted for in the KISP referendum and subsequent Special Meeting.

Aligning grower and shareholder interests helps to ensure that when the company fulfils its obligations both as a purchaser and on-seller of kiwifruit and as a company with duties to its shareholders, those obligations are fundamentally the same. The more that growers and shareholders are not the same people, then the interests of a grower may focus more singularly on its OGR, and the interests of the shareholder (who may or may not still be a grower) will be focused on a return on investment by way of dividends.

If we take the example of PVR licensing, growers purchase the licence for various reasons but often to diversify their portfolio and improve their returns on their orchard; shareholders share in the return on investment the company has made from investing in developing PVRs. If the grower is also a shareholder they can benefit from both sides of the equation.

Another example is Zespri’s 12-month supply business (ZGS). As explained in the PDS, ZGS is the segment of the company that focuses on procuring or growing Zespri branded fruit in the Northern Hemisphere in order to fill shelf space in between the NZ supply windows. The ZGS business plays a big part in ensuring Zespri’s brand stays in customers’ minds and on shelves 12-months in the year. The ZGS business includes returns from the buying and on-sale of fruit grown in Europe and Asia, and royalty incomes from SunGold. Income from the ZGS business is company income, so shareholders also have an interest in how well it does.

Please note that the comments above reflect our views as to the importance of the Zespri ownership model for the industry in New Zealand. Zespri cannot, and does not, give any recommendation or opinion as to whether any person should buy or sell Zespri shares. If you are contemplating buying or selling Zespri shares, you should seek advice from a financial advisor or other professional.

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You can learn more about the targeted share offer from articles in recent Kiwifliers: