Badgerland Financial eyes merger with 2 other ag associations
Three financial associations covering rural and agricultural interests in some of the most prime farming counties in Wisconsin, Minnesota and Illinois are recommending a merger to their respective members and stockholders with a proposed headquarters in Sun Prairie.
Directors from Badgerland Financial, of Prairie du Sac, as well as AgStar Financial Services, of Mankato, Minnesota, and 1st Farm Credit Services, of Normal, Illinois, unanimously voted to recommend the merger Thursday, according to a statement released by Badgerland Financial.
The proposed merged association would cover 144 counties in the three-state region. Badgerland Financial provides credit, crop insurance, and tax and accounting services to farmers, agribusinesses and rural residents in 33 southern Wisconsin counties. AgStar serves 69 counties in southern and eastern Minnesota as well as northwest Wisconsin, while 1st Farm Credit serves 42 counties in the northern half of Illinois, the statement said.
“That’s a big merger,” said Bruce Jones, an ag economics professor at UW-Madison. “Look at the area it includes: A super agricultural area of Illinois and most of the prime farm income areas of Wisconsin and Minnesota. This is really good in terms of putting together regions that are very successful in agriculture, and it should make the merged association very strong.”
The three organizations combine to employ about 1,200 people, and layoffs are expected to be low if the merger goes forward, said Rod Hebrink, the president and chief executive officer for AgStar, who is expected to head the proposed merged association. “We foresee very similar resource needs to support the merged organization,” he said.
Jones said he believes most of the layoffs will be at the senior management level.
Sun Prairie’s Badgerland office was picked as the headquarters site because it’s geographically fairly central for the new organization, according to Hebrink.
“The merged organization is committed to a decentralized operating structure,” he said. “There will be no office closures with the proposed merger, nor will all of our corporate functions reside in this office.”
After a review and approval by AgriBank, the funding bank for the three associations, and the Farm Credit Administration, the merger will be put to a vote of the stockholders of the three associations, most likely in the first quarter of next year, the statement said.
The board of directors for the proposed merged association will be comprised of 14 member-elected directors and three outside appointed directors. If stockholders vote in favor of the merger, the new board will have equitable representation of board members in proportion to the number of stockholders from each of the three areas, the statement said.
“This past spring we agreed our associations have very similar commitments to serving agriculture and rural communities,” Hebrink said. “As we discussed possibilities, we found we’re more alike than we are different.
“Our similarities, including our positive working relationships and financial strength, offer a strong foundation of synergies that allowed us to move forward with a due diligence process to carefully evaluate if a merger would be in the best interest of our members, clients and stockholders,” Hebrink said.
Badgerland president and CEO Diane Cole said the three associations understand that “we weren’t looking for one organization to carry their current strategy into the proposed merger, but rather, evaluate how we take the strengths of the three associations and build on them to offer value to our members and stockholders.”