Membership votes to merge cooperatives
Published 2:56 pm Saturday, December 26, 2015
Watonwan Farm Service Co., based in Truman, and Central Valley Cooperative, based in Owatonna, are eager to announce that voting members of both cooperatives have approved a plan of merger to bring their two companies together, according to a press release. Both memberships were overwhelmingly in favor of the unification and exceeded the state required two-thirds majority vote with 76 percent of the WFS membership ballots cast in favor and 75 percent of the Central Valley Cooperative ballots cast in favor of the unification.
The merger will go into effect on March 1, 2016, and the newly unified company will be named Central Farm Service. WFS Chief Executive Officer Todd Ludwig will take the reins as CEO of the new company, while CVC CEO Gary Mohr will become the chief administrative officer. As stated in the merger proposal documents, both administrative offices, Owatonna and Truman, will remain open in order to serve members’ needs.
The plan was first announced to the respective memberships in a letter on Oct. 14, which also included a list of anticipated questions and answers. Following harvest, informational meetings were held and ballots, along with additional information, were mailed to voting members on Dec. 2, with a due date of Dec. 21.
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“With this positive vote, our memberships have created a long-term, viable local cooperative that will thrive in the decades ahead,” said WFS board Chairman Charlie Johnson. “While we projected $5 to $7 million in tangible benefits to our members in our proposal, I think the intangible benefits may be even greater.”
Intangible benefits identified in the merger proposal included: employee opportunity and retention, geographic diversity and maintaining member control.
“Growth is a large component of success,” added Eric Schrader, CVC board chairman. “We believe that the unified cooperative will be a survivor and we feel fortunate to have had the opportunity to bring these two strong cooperatives together.”
As stated in the plan of merger documents, equity held by both memberships will transfer dollar for dollar and all existing equity is intended to be retired under the current practices of each co-op. Equity earned in the new co-op will be retired on years earned. There will also be equal representation from each of the former co-ops, with six directors from each board.
The projected annual sales of the combined cooperative is expected to exceed $600 million with a diversified product and service line that includes: grain marketing and merchandising; crop production, seed and precision ag; bagged feed and bulk feed manufacturing; bulk energy delivery and storage; and producer financing.
The newly merged cooperative, Central Farm Service, will service a trade area that is approximately 110 miles north and south from Randolph into Iowa and 125 miles east and west from Hayfield to Welcome. The two companies currently cover a trade area that is adjacent to each other but do not operate facilities in the same communities.
CVC is a full-service agricultural supply and marketing cooperative serving southeastern Minnesota. With revenues of over $258 million last year, 180 full-time and more than 65 seasonal employees, Central Valley Cooperative has a significant impact on the local economies it serves.
WFS is a farmer-owned cooperative operating facilities throughout south central Minnesota and north central Iowa. With sales of more than $359 million in 2015, WFS serves over 4,000 customers, while employing 230 full- and part-time employees. The cooperative is highly diversified with products and services in grain marketing and merchandising, crop production and seed, feed manufacturing, bulk energy and producer financing.