Shareholders failed to support the proposed merger of post-harvest kiwifruit operators Eastpack and Satara 'by a hair's breadth”.

Satara chairman Hendrik Pieters told SunLive today shareholders voted overwhelmingly for four of the five measures, but failed on the fifth by a slim margin at the vote on Friday.

'Four of the five votes were between 80-98 per cent,” says Hendrick.

'The threshold was 75 per cent. The one we missed on was 74.8 per cent. So we missed by 0.2 of a per cent.

'So we've missed by a hair's breadth basically, on one resolution.”

The vote failed on the transactor share proposal that would mean Satara grower shareholders receive one Eastpack transactor share for each dollar paid-up on their Satara transactor shares.

'We are just working though with Eastpack now, looking at a process whereby we go again to see if we can consummate the deal,” says Hendrick.

'It can't go ahead until we have got all five across, so we are working on a process. Once we have finalised all the details we will come out with some statements on that.”

Overall, 85per cent of the vote is for the merger, with Eastpack shareholders voting 97 per cent for the merger.

Hendrik and Eastpack Chairman Ray Sharp are pleased with the overall strong mandate for the merger.

If no solution can be found, both Ray and Hendrick say both Eastpack and Satara will continue to operate and compete on a stand-alone basis with both companies expecting weaker trading results this year.

The merger will create the single largest, grower owned kiwifruit packing and cool storage operation in New Zealand, handling an estimated 27-30 per cent of New Zealand kiwifruit volumes.

Claimed benefits are that it will ensure low packing prices remain sustainable for the benefit of shareholders of the Enlarged Group, and it will underpin Eastpack's ability to continue to pay dividends to its investor shareholders and Satara's shareholders, who become Eastpack investor shareholders.

There are also expected to be savings from improved facility use, increasing the potential to improve the profitability of the enlarged group beyond that achievable if the companies continue to operate separately.

Operational synergies and cost savings are expected to be $3.5million to $4.3 million per annum from the 2014 financial year, ($0.13 to $0.16 cents per Class 1 tray) with $2.7million to $3.3million expected in 2013.

The merger is being driven in part by the impact Psa is having on the kiwifruit industry.

Industry fruit volumes are reduced from a high of 113 million trays in 2011 to 98 million trays in 2012. Based on industry volume assessments provided by Zespri, volumes are expected to continue to decrease in 2013, and until 2015. Zespri predicts volumes will not return to 2011 levels until 2018.

All participants in the kiwifruit industry; growers, post-harvest operators like Eastpack and Satara to Zespri, are expecting profits to reduce in these years – and the Psa impact on crop volumes could be worse than anticipated.

Ray says the two companies are obvious merger partners.

'Their respective strengths and the benefits that will follow from the proposed merger will provide a much stronger platform to deal with the challenges that the industry is now facing, particularly Psa.”