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Friday
Jun102011

Farmers Mutual Fails to Approve Merger with Federated Tel.

Unknown Opposition to Combination of Minnesota Coops Contributed to Lack of Support

For the second time in less than a year, the members of Farmers Mutual Telephone Company (Farmers) in Bellingham, Minn. have failed to support a proposed merger between Farmers and Federated Telephone Company (Federated) of Chokio, Minn. The members of the two cooperatives voted on the proposal yesterday after a relatively low turnout on the same matter last fall prompted the coops to change their bylaws to allow for mail ballots. 

At the vote in November only 30% of Farmers’ members had voted; with the addition of a mail ballot option, approximately half of Farmers’ members voted yesterday—but with nearly identical results.

About 90% of Federated’s members voted in support of the combination, according to Kevin Beyer, general manager for both Farmers and Federated. But only 57.5% of Farmers’ members voted to merge, and because Minnesota requires a supermajority, the merger proposal has now been shelved. Beyer indicated that the members of Farmers have made their lack of support clear and that there would be no attempt of bring the matter to vote again, at least not in the near future.

Unidentified opponents to the merger had been running radio ads urging members to oppose the combination, and while Board members offered to sit down with opponents and discuss their concerns, Beyer said they did not come forward and remain unidentified.

The cooperatives had advertised that they could save $200,000 per year in expenses and that the uncertainty surrounding Universal Service Funding and other competitive concerns made the merger an important strategic move. Beyer emphasized that the savings were not expected to come from lost jobs and that in fact the combined company would have hired new staff. The combination would also have extended Federated’s cable franchise and allowed the new company to offer video services in Farmers’ service areas.

Farmers had an estimated 1,037 access lines at the end of 2010; Federated had 2,350. Beyer said that the two companies already share a switch and network facilities as well as staff--the only difference between the two were their Board and members

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