A move designed to strengthen two longtime area businesses — Waconia Farm Supply (WFS) and United Farmers Cooperative (UFC) — will take effect on Sept. 1 when WFS officially merges with UFC. The pending merger was announced in April after WFS shareholders overwhelmingly voted in favor of the move.
“We are 100 percent positive that when the whole thing comes together, it will be a very positive move forward for all members and employees,” said Jeff Nielsen, General Manger / CEO of UFC. “It is our full intent to make Waconia Farm Supply better, stronger and an even bigger part of the greater Waconia community.”
WFS, which has been in business for more than 65 years (it celebrated its 60th anniversary in 2006) and has locations in Waconia, Cologne, Hamburg, Maple Plain and Burnsville, and UFC collectively boast 160+ years of operation.
“We’re bringing together many decades of cooperative history under this merger,” acknowledged Nielsen, noting that both WFS and UFC got their starts as creameries. UFC is a farmer owned cooperative that was formed in Lafayette, Minn., in 1915. Its center of operations is located in Winthrop, Minn. UFC currently has a dozen locations and serves customers in multiple counties across central Minnesota.
“United Farmers Cooperative today is the result of many mergers over time,” Nielsen said. “United Farmers Cooperative is and always has been a cooperative. It has grown through strategic mergers and acquisitions, as its members saw fit, to ultimately better serve the customers and members.”
In 2013, UFC will generate approximately $350 million in total revenue. In 2014, those revenues are expected to exceed $400 million with the addition of WFS. UFC will grow to approximately 400 employees as a result of the merger, which originated when WFS decided to explore a possible merger with a neighboring cooperative last December.
According the Nielsen, the action was related, in part, to surviving a tough economy.
“Like many other businesses, with the downturn of the economy and trying to meet its customers’ needs, Waconia Farm Supply found itself in a difficult position and needed to make some decisions regarding its future financial prospects,” Nielsen said. “The Waconia Farm Supply Board of Directors decided to explore several options for the future and they talked to five neighboring cooperatives.”
A third party consultant helped guide WFS through the process, which included discussions with UFC, Centra Sota Cooperative of Buffalo, Genesis of Le Center, Hutchinson Co-op, and Mid-County Coop of Cologne.
“After reviewing each cooperatives’ core agricultural businesses (Feed, Agronomy, Grain, Energy, Equipment and Consumer Goods) and discussing with each cooperative separately, the Waconia Farm Supply Board decided that United Farmers Cooperative would be the best fit for their cooperative and membership,” Nielsen said.
Nielsen said UFC was honored to be selected but they had to be sure the move was right for UFC.
“It was up to the UFC Board and Management Team to decide if Waconia’s merger request would honor our commitment to provide value to our current customers and members,” he said, citing UFC’s mission statement: “To supply our customers with technology, products, and services in a manner that is extraordinary enough to add value to their lives.”
After conducting research, UFC officials learned that almost half of the WFS voting members were already members of UFC through selling grain to UFC’s Grain Division, (now called United Grain Systems or UGS) or using UFC’s farm equipment services.
“Through this process we learned Waconia has some great facilities and some great business units that have been successful for many years,” Nielsen said. “They have also invested in some business units that were not doing as well and would need to be dealt with in a straightforward and businesslike manner. We needed to see if they could become successful, or if there would have to be an agreement to move out of those non-core businesses.”
Nielsen said the Waconia Board of Directors were “very open” to addressing these matters and were thoroughly engaged throughout the process, from the financial studies to the facility tours.
Ultimately, the UFC Board of Directors unanimously supported the merger.
As explained by Nielsen, because this is a merger by acquisition, all existing bylaws, equity redemption programs, Co-op name and governance remains with UFC and therefore, the UFC Board of Directors, not its members, represented UFC for the vote.
After the cooperatives signed a confidentiality agreement that indicated the desire to pursue unification between the cooperatives exclusively, several meetings were held in March for patrons, employees and community members to discuss the potential new organization. The meetings were held in Waconia and Hamburg for WFS members and in Winthrop for UFC members.
“When the meetings were complete and the votes counted on April 1, the members of Waconia Farm Supply had overwhelmingly voted in favor of the proposal, with 90 percent of the votes case being in favor of the merger,” Nielsen said. “This majority is even more impressive when you consider that over 65 percent of the eligible voters showed up to vote or turned their ballots in. This is an excellent showing of just how interested their membership is in seeing them have a future as part of UFC.”
Once the merger is official on Sept. 1, WFS will operate as a division of UFC but will continue to use the “Waconia Farm Supply” name. All equity in WFS will switch to UFC with no losses. According to Nielsen, aspects of the merger that appealed to WFS officials include UFC honoring WFS stock dollar for dollar and that at UFC, equity can be cashed out at age 69, which isn’t the case under WFS.
Nielsen touched on the long-term stability the merger will have on WFS and UFC.
“We are a strong company and we have a strong balance sheet,” said Nielsen, who noted that one immediate goal is to get profitability back to WFS so dividends can be sent out to members. “This merger is going to add some real viability and stability to the financial base of UFC as well.”
As for WFS, which will be led by location supervisor Dean Meyer, Nielsen emphasized that things will remain business as usual. Whether it’s the hardware store, garden center or snowmobile sales, nothing is going away providing officials can figure out ways to keep those offerings financially viable for the business.
“If we do our jobs right, it’s our intent that customers will never notice a change except for even more value,” Nielsen said. “This facility is going to be here. We are committed to honoring the long tradition that Waconia Farm Supply has had and only make it stronger and better.”
“Both Waconia Farm Supply and United Farmers Coop have a great group of dedicated employees who take pride in our company,” Meyer said. “Our employees are excited for the new opportunities that will be available for our community and patrons. We look forward to seeing you soon.”
• To learn more about UFC, contact (952) 647-6600 or visit www.ufcmn.com. For more information about WFS, contact (952) 442- 2126 or visit www.waconiafarm.com.
Contact Todd Moen at [email protected]