IT set to milk dairy merger

Huge opportunities for IT companies are being picked as the two biggest dairy co-operatives in the country and the New Zealand Dairy Board prepare for a greenlight on their merger.

Huge opportunities for IT companies are being picked as the two biggest dairy co-operatives in the country and the New Zealand Dairy Board prepare for a greenlight on their merger.

Computerworld understands that while there is as yet no final plan, the dairy companies are expecting a major overhaul of all their IT systems, in order to merge their three distinct internal architectures, databases and ERP systems, and to link to other global dairy companies. Rather than selling off one of their two portals, Fencepost and RD1.com, the companies are likely to merge them.

The grand IT merger will revolve around creating a transparent value chain, “providing a view from cow to customer, with no hidden profits along the way“, one source says.

The source says this means the companies will most likely “be forced to start with a clean sheet of paper”.

The current systems have been configured only to work within a three-step constraint of farmer to co-op, co-op to Dairy Board, and Dairy Board to the world.

New Zealand Dairy Group, last year a $3.4 billion business, and Kiwi Co-operative Dairies, a $2 billion business, have signed a merger agreement which includes their exporting monopoly, the Dairy Board. The Dairy Board, a $7 billion business, is 95% owned by the two companies and when merged as GlobalCo, the three companies are expected to save more than $300 million a year.

A hefty slice of that will be in IT savings.

The mega-merger relies on 75% approval by shareholders in March and needs government approval to circumvent the Commerce Commission and to make legislative changes.

Senior management at all three companies would not comment on plans.

All three have already undergone significant IT projects in the past 12 months with Dairy Group completing the largest information services project in its history and the Dairy Board choosing Equant to manage an e-business based global network.

Both are heavy users of Oracle while Kiwi has a strong history with Jade.

A merger of the two portals would bring together their respective strengths - RD1.com in merchandising and Fencepost in information services. RD1.com chief executive Neal Murphy says while the boards have not discussed this, it "would be almost inevitable we would merge".

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