Five Star Coop in talks to merge

by Michael Hohenbrink

Mid-America Publishing

Proximity and the ability to respond better to emerging challenges are being stressed as early talks proceed that might see the merger of two Iowa cooperatives. 

Farmers Win Cooperative is in talks with Five Star Cooperative for a merger that could unite the two cooperatives.  Talks have been ongoing with both boards inking a letter of intent to proceed with the merger.

The talks follow a lengthy process, with Five Star first eyeing the possibility of a merger five years ago, said Ken Smith, general manager for Five Star Cooperative, during an interview Monday with Mid-America Publishing.

“We believe this merger moves the needle in a very material way for our employees and our customer,” said Smith.

Five Star and Farmers Win have, in turn, been in the early stages of exploration for about three years, said Smith.

Key factors prompting exploration include evident margin compression for the industry, and Farmers Win fit what Five Star was looking for, so the latter reached out to Farmers Win, with both cooperatives enjoying similar company cultures, said Smith.

Farmers Win has locations throughout Winneshiek and Fayette counties, from Ridgeway to Jackson Junction to Waucoma and other area communities.

Immediately contiguous to overlapping in some places, Five Star, based in New Hampton, serves Burchinal, Clear Lake, Dougherty, Galbraith, Hanlontown, Ionia, Joice, Klemme, Lawler, Mason City, Nashua, New Hampton, North Washington, Rockwell, Scarville, Sheffield, Swaledale and Ventura.

If the merger proceeds, the combined entity would stretch two-thirds of the way across northern Iowa.

The process began before the pandemic hit, increasing the difficulty for any exploration of a merger. COVID-19 certainly slowed down the process a bit.

“[I]t’s really expanded our time frame,” said Trent Sprecker, general manager of Farmers Win Cooperative.

Nonetheless, Sprecker sees the move as an opportunity. Sprecker thinks cooperatives are seeing an increasingly complicated and

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regulated industry as time goes by.

“We need to remain relevant for the future,” said Sprecker.

A due diligence study has been undertaken already.

No announcement on naming and headquarters is being made public at this time, said Laura Underwood, marketing and communications director for Five Star.

That said, physical locations are likely to remain as they are with no major changes being looked at for where the cooperatives have a presence on the ground, said Sprecker.

Members could see a vote around August with at least 50 percent (plus one) of members needed to participate and then two-thirds of each cooperative’s membership taking part needing to give approval to move forward.

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