The United view

The leadership of the United Fresh Produce Association clearly places the blame of the failure of the merger talks squarely on the shoulders of PMA's leadership group.

"We (The UFPA board) received an ultimatum from PMA [in early July]," said United Chairman David Krause of Paramount Citrus, who was also a member of the task force. "We sent a counter proposal hoping that at least somebody on the board would take a look at it and consider it. But [the PMA leadership] did not bring it to a vote. They merely declined to consider it."

A statement released on behalf of the entire United board said basically the same thing: "We are disappointed that in the end, PMA's current leadership did not agree with what we believe was a very fair, member-oriented plan that could have blended the goals and priorities of both associations."

United President Tom Stenzel added that the July 17 PMA statement basically ended the discussions. Mr. Krause agreed, stating that the board and staff had "spent a lot of time on this issue over the past 18 months. It is time to refocus our attention on the work of the association."

The United Fresh chairman was clearly very disappointed in the final outcome and the fact that the staffing issue was the only hurdle that proved too high to jump. He said the task force did recognize from the very beginning that the leadership question was a major issue, but "we decided to tackle everything else and leave it until the end. In hindsight it might have been better to discuss that first."

But Mr. Stenzel, who is a career association professional, said, "There was no reason to believe that this issue couldn't be solved."

He was incredulous that the staffing of the merged associations proved to be so difficult, stating that it is virtually unheard of in the business of running associations. Mr. Krause confirmed that the task force did address every other issue and did solve those issues. How the joint organization would operate, including the governance structure, was agreed upon.

Though members of both boards did sign confidentiality agreements stating that they would not discuss the negotiations, as the merger talks took place over those 18 months there were many leaks. While the final merger agreement determined that the two organizations were merging as equals, there were many leaks during the process as to the financial strength of each organization. In fact, some opined that United could not survive without being merged into PMA.

Mr. Krause said that couldn't be further from the truth. In fact, he indicated that during the due diligence process when the task force examined the financial records of each organization, the United group took pleasure in debunking that perception that he agreed some members of the PMA board held.

Mr. Stenzel went further, calling those reports "spin" and "unfounded rumors." In fact, going forward he argued that United has a better business model and is in better financial shape than PMA. He said that United draws its income from many different sources, including member dues, fund raising and events, while he indicated that PMA's financial solvency is more closely tied to its convention.

"I've seen it happen in many industries where a trade show goes up in smoke and the association follows," he said. "We have a much more sustainable business model."

And speaking of the convention, both Mr. Krause and Mr. Stenzel defended the United convention as a worthwhile endeavor that will continue to prosper and move forward. It is no secret, however, that the PMA convention is the largest one in the industry, and is the "must go to" convention for many more industry veterans.

"We had a very successful trade show in Dallas [in May]," said Mr. Krause, "and we are going to continue to build on that. Since then we've had many companies that saw what we did and want to partner with us as we move forward."

He said that the United convention and trade show will continue to be held, and he expects it to prosper.

Mr. Stenzel said that it remains to be seen which convention offers better value. "It may well be that a smaller convention where real business is conducted is better than a larger convention with a lot of hoopla and parties."

Another question that was on the industry's collective mind following the end of the negotiations was the value proposition that each association brings to the table.

It was no secret that the latest merger talks were pushed along quite a bit by some of the larger industry players, who let it be known that they are weary of supporting two organizations that have overlapping responsibilities.

Mr. Krause acknowledged that there were "pressure points" from the industry that were a factor in the merger discussions, and he said that it remains to be seen if these organizations will continue to support both organizations.

Both he and Mr. Stenzel seemed quite confident that United offers a lot of value and deserves support. In fact, Mr. Stenzel indicated that the organization would do more to let the industry know how it represents it in Washington, DC, and elsewhere.

"Government affairs involves more than writing press releases," he quipped.

He indicated that United is the organization representing the entire industry in the political arena and seemed to believe that fact may not be well known.

"There will be more clarity as to what we do," he said. "There is a difference between the organizations."

The PMA view

Representatives of the Produce Marketing Association said that at the end of the day, it was really the different cultures of PMA and United Fresh -- not merely the leadership issue -- that led to the cessation of merger talks.

"This is not about Bryan Silbermann," said Mike O'Brien of Schnuck Markets, who is a former chairman of the board of PMA and was the co-chair of the joint task force that considered and worked through the merger issues.

Mr. O'Brien said that from the very beginning of the 18 months of negotiations, it was very obvious that the two organizations had a different culture and conducted business in different ways. He said that PMA is run like a business with its revenue stream a very important component that allows it to participate in industry endeavors such as Center for Food Safety, Alliance for Food & Farming and the PMA Foundation for Industry Talent.

He said that the board feels a very strong fiduciary responsibility and discussing that aspect of the association is a regular part of every board meeting. He did not articulate how United Fresh is different, but indicated that it was very important to the PMA board that this governance structure be the one adopted by the single association if the merger occurred. And he indicated that it was the governance structure adopted for the most part by the task force.

Also involved in the interview was PMA's current chairman of the board, Rich Dachman of Sysco, who said that from the very beginning the PMA board believed strongly that its business model, including its more robust revenue stream, has been on a very successful run and the board wanted to preserve that model moving forward.

Mr. O'Brien said that even though PMA was the larger of the organizations with more members and more revenue, it did compromise with United on an equal basis on virtually every aspect of the merger, including representation on the board. But he indicated that the equal footing lasted until the final piece of the puzzle, at which point PMA could no longer compromise.

Mr. Dachman added that it was always the responsibility of the task force to pick the CEO of the organization prior to the merger. He indicated that this was an important provision of the agreement to the PMA board. While the United board suggested that the merger go forward allowing the new board to pick the new CEO, these two PMA leaders indicated that picking a leader before the merger occurred was very important to PMA.

However, they declined to directly discuss the failed process of picking the eventual CEO of the new organization, preferring to take what they called "the high road" and move forward rather than discussing the past.

They did acknowledge that there has been pressure from industry members to successfully conclude this merger, and they know there is much disappointment. Mr. O'Brien said that PMA is a member-driven organization and he urged disappointed members "to talk to us about it."

While the two men expressed their own disappointment that the merger did not succeed after much hard work and sincere effort of all involved, they said that not all was lost.

"We said from the very beginning that we would either end up merging or there would be much more collaboration than in the past between the two organizations," said Mr. O'Brien. "And I believe that will occur."

Mr. Dachman said that in the process both organizations learned much more about the other, which should allow for a better working relationship.