Fonterra offer oversubscribed

Dairying seems to get more bad headlines than good, but that obviously doesn’t reflect investors’ confidence in the industry.

A share broker tells us that his firm is getting only 5% of the Fonterra units it applied for and the price is likely to be towards the upper end of the $4.50 – $5.50 spectrum.

That could be a concern for farmers who have to share-up to match increased production.

But once they’ve bought the extra shares they could sell them again which wasn’t an option before.


One Response to Fonterra offer oversubscribed

  1. Ele, your last two sentences point to a whole host of issues with this. As you say, this is going to set the price, so premiums are going to hurt new and existing farmers sharing up. Also, however, once farmers start buying and selling shares, then it’s quite possible they turn themselves into share traders for tax purposes (?), meaning yet another area of increasing uncertainty between dairy farmers and IRD, finally, talking to a bank manager, a messy problem when settling farm purchases as no one knows now what to impute for share price when arranging for financing.

    It’s going to be interesting.

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