Two of the largest co-ops in South Dakota are merging, and they did it with the help of the Land O’Lakes strategic asset management team. North Central Farmers Elevator and Wheat Growers put their unification plans to a vote of members this fall, and it was approved by a wide margin.
But passing the merger was far from a sure thing. In fact, the cooperatives had attempted to merge two years ago, but the membership voted it down.
One of the services the strategic asset management (SAM) team offers is facilitating co-op mergers. The SAM team has handled many co-op mergers and ag business acquisitions, working with small companies and billion-dollar enterprises alike. So, when NCFE and Wheat Growers decided to try to merge again, they called on the SAM team to facilitate.
The SAM team worked with NCFE and Wheat Growers on their first attempt, and they used that experience and their expertise honed through other successful mergers with co-ops and other ag businesses to help take this one across the finish line. Jim Wyvell, senior director of strategic asset management says the SAM team provides substantial value to member co-ops.
“The SAM team is one of the unique benefits for Land O’Lakes members that leverages a deep co-op industry insight that many other providers don’t have,” Jim says. “We bring members decades of experience in retail agriculture business management to advise on growth-based decisions such as cooperative mergers, business acquisitions, business optimizations, and new grain, agronomy, and feed mill asset evaluation and construction consultation. When co-ops consider a merger, we are the third-party advisor that works with them from initial discussions through due diligence, the member vote, and integration.”
Jim says this time around, success was due to the cooperatives using a different approach to the merger talks, kicking off with a two-week window where members were encouraged to give their board members direct feedback about revisiting the merger. "The two cooperatives used the feedback to build the case for the merger,” Jim says. “This time a more grassroots approach was used and increased interactivity with members.”
As a member-owned cooperative, helping position members for a successful future is a top priority for Land O’Lakes. And as co-op mergers become increasingly more common, the SAM team is positioned to be a valuable asset to members.
Mike Nickolas, general manager of NCFE, says that although both co-ops were financially strong heading into unification discussions, the merger was necessary. “With the ag economy we're facing, we had to do this,” he says. “The SAM team was very involved with the whole project. They have talent that we don't have ourselves. They were a buffer on some of the topics, and they helped a lot on planning our new governance model.”
Chris Pearson, CEO of Wheat Growers, says the SAM team had the expertise NCFE and Wheat Growers needed to complete the unification.
“The SAM team was able to bring perspective from other mergers they had done recently. That was helpful. They also knew about our co-ops,” Chris says.
He adds that having a partner like SAM made the negotiations easier.
“It's very helpful to have a third party that isn't wearing one of our logos,” he says.
And, he could draw on SAM’s expertise because he had worked with Jim and SAM director Richard Bentley before.
“For me personally, they were a resource. They are a couple of guys I could just bounce some ideas off,” he says.
Chris and Mike say that now the merger has been approved, they have a lot of work ahead in combining their operations – including naming the new co-op, which will have annual revenue of approximately $2 billion. The unification becomes official on February 1. Both co-ops, with nearly 200 years of history between them, emphasize that they’re forming an entirely new co-op, rather than one absorbing the other.
“It's going to be bigger, and we're going to be more relevant. Farms keep getting bigger, and we’re keeping pace,” Mike says. “The future is very bright for the new co-op going forward.”
“There’s a lot of work ahead,” Chris says. “For us, this is more of a start than an end.”
To learn more about SAM's services and expertise, contact SAM via email, call SAM at 1-866-416-7950, or go here for more information.