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This is the first full month under the criteria of the Overseas Investment Amendment Act passed last year. Unsurprisingly, although the new Act was supposed to tighten up on overseas sales of land, the great majority of the decisions are for land sales. There is no sign of additional scrutiny and no rejections. Only independent drug manufacturer sells “Karitane” to baby food pariah Nutricia Ltd, a subsidiary of one of the villains of the international controversy over the marketing of breast-milk substitutes, has approval to take over the nutritional food business of Douglas Pharmaceutical Ltd and Douglas Nutrition Ltd. Nutricia is a subsidiary of NV Verenigde Bedrijven Nutricia of the Netherlands. The Douglas group is the only locally owned pharmaceutical manufacturer in competition with the huge drug transnationals and produces the Karitane infant formula products, a brand it bought from the Karitane Society. The amount paid by Nutricia is suppressed. The issues underlying the breast-milk controversy are summed up in Multinational Monitor, March 1992, “A Formula for disaster”, p.9-13, by Ellen Sokol:
Yet the companies continue to break the code. The International Baby Food Action Network (IBFAN) in October 1991 identified the worst offenders as Nestlé, Wyeth (a subsidiary of American Home Products), two German companies, Milupa (remember that name) and Hipp, and the Japanese company, Meiji. Nestlé, as the market leader, was always seen as the chief offender, but Multinational Monitor listed Milupa, Nutricia and Cow & Gate (U.K. domiciled but owned by Nutricia) as fifth, sixth and seventh by worldwide sales, as also being significant in their violations of the WHA Code. Milupa was a subsidiary of Altana and was found to be totally or substantially violating several sections concerning labelling, promotion in healthcare facilities, promotion to healthcare workers, giving free samples and the marketing of soft foods. Milupa has also been criticised for its marketing of heavily of heavily sugared baby herbal drinks. In December 1990, a Frankfurt court ordered the company to pay compensation to parents for causing severe dental caries in two children. The company was accused of negligence and providing insufficient warning on packaging about the sugar content of its products. About 100,000 children are said to have suffered severe tooth damage from these drinks marketed by Milupa and other producers. (Ref: Multinational Monitor, op cit, and World Wide Web, http://www.mcspotlight.org/beyond/nestle.html, “McSpotlight on the Baby Milk Industry”.) Nutricia is a violator of the Code by promoting baby milk to health workers, and giving free samples or supplies. It is also only in partial compliance in its labelling, promotion in healthcare facilities, and inappropriate marketing of follow-up milks. Their Cow & Gate Plus products used pictures of babies on labelling in Sierra Leone in 1990, and carried no health warning or reference to advice from health workers. It also engaged in promotion in healthcare facilities, and was only in partial compliance in other areas of the Code. As recently as March 1996 Nutricia has had formula baby milk imports to the U.S. detained by the U.S. Food and Drug Administration for being an “Unregistered LACF Manufacturer”. (e.g. World Wide Web, http://www.fda.gov/ora/ids/3/ora_ids_i_3_40.html , “Detentions for Industry 40”.) Nutricia is on an acquisition campaign. It is currently taking over Milupa and the take over has been referred to the U.K. Monopolies and Mergers Commission (MMC) because of its implications to the baby milks and meals market there. (Chemist & Druggist Newsweekly, 6/4/96, “Nutricia’s acquisition of Milupa referred to MMC”.) Another acquisition led the U.K. Competition and Consumer Affairs Minister, to order that Nutricia should be required to give price undertakings restricting Nutricia’s ability to exploit its position in the specialist gluten-free and low-protein food market. This followed its merger with Valio International UK Ltd now known as Scientific Hospital Supplies Holdings Ltd (SHS). (Department of Trade and Industry, U.K., Press Release, 21/12/95.) His decision followed the publication of a report by the MMC which concluded that the acquisition by Nutricia of SHS “may be expected to operate against the public interest by strengthening Nutricia’s ability to increase prices for a number of specialist gluten-free and low-protein products (including bread, rolls, and flour mixes). The MMC recommend that Nutricia undertake for a period of four years to set prices of these products no higher than at present plus the annual change in the retail price index less two percentage points.” Nutricia is also involved in privatisation of East European industry: it has acquired a 22.5% stake in Hajdutej Tejipari, Hungary’s largest regional dairy and owns a distribution joint venture in Hungary. It also owns two dairy companies in Poland and two in the Czech Republic. (World Wide Web, http://www.business-europa.co.uk/bbhung.html, The European Business Home Page, Business Europa Magazine, Summer 1995.) The buyout is particularly poignant in that the Douglas group is the “only New Zealand-based manufacturer of pharmaceuticals” (Press, 5/2/93, “Drug company ready to act”), the second-largest pharmaceutical supplier in New Zealand (Press, 31/3/95, “Douglas growth”, p.21), and an important supplier of “generic” competitors to the brand-name pharmaceuticals of the transnational companies, succeeding despite restrictive patent rules designed to protect the transnationals. In addition the Karitane name and brand has particular significance to New Zealanders. This brand is presumably the object of this sale, though it is not clear if other products are also involved. Douglas Pharmaceuticals was founded by Graeme Douglas, then a retail pharmacist at Te Atatu South, in 1967. Its most important “generic” product is the asthma drug Atomide Forte, which does the same job as Beclo Forte, made by U.K. transnational (originally of Aotearoa), Glaxo. In February 1995, Glaxo challenged the Ministry of Health in the High Court when it said Atomide Forte had passed safety tests and could be used in place of Beclo Forte. Glaxo argued that the two were not equivalent. At that time Glaxo was earning $17 million a year from its inhaled asthma drugs, and generics were earning only about $1 million. (Press, 21/2/95, “Government’s generic medicines list facing legal challenge from drug company”, p.6.) Douglas also markets ZenoDerm which was developed by a company with ties to Otago University. It reduces scarring from wounds, burns and leg ulcers. In addition Douglas does contract manufacturing for about ten transnationals, which “have closed their manufacturing plants and retrenched to Australia since the Closer Economic Relations agreement and New Zealand’s abolition of subsidies.” Douglas employs 165 staff including 45 scientists and three medical practitioners. (Press, 10/2/93, “Douglases beat the patent handicap”.) Skellerup, 25th biggest company in Aotearoa, now an overseas company Skellerup Group Ltd, formerly a public company 30% owned by Brierley Investments but subject to a management buy-out last December, is now owned by Maine Investments Ltd which is 84% owned by GS Affiliated Funds associated with GS Capital Partners II of the U.S.A. and 16% by members of the senior management of Skellerup Group Ltd, all of whom are Aotearoa residents. The price paid was “approximately” $407,129,262. According to press reports, “GS” stands for Goldman Sachs, the U.S. finance house which financed Skellerup chief executive Murray Bolton in the buy-out. It was financed by equity provided by the Skellerup management group and the Goldman Sachs funds, and senior debt and subordinated debt provided by a syndicate of financial institutions. (Press, 20/12/96, “Skellerup chief steers $400m bid to buy company”, p.25.) Prior to the buy-out, Skellerup, though controlled by Brierleys and hence technically an overseas company, had an exemption from the overseas investment regulations. On 2 April that exemption was cancelled. Skellerup is a diversified conglomerate of manufacturing companies assembled by Brierleys from its other acquisitions. According to Brierley annual reports, it includes the original Skellerup Industries based on the old Christchurch family firm’s rubber products; Masport, the mower company now making wood fires, barbeques and operating Aotearoa’s largest iron foundry; Paykel engineering supplies, Projex equipment hire, Skellerup Flooring, Cable Price Corporation, and Viking Footwear; Lane’s Industries, including market leader Palmers Gardenworld, and Watkins seeds; DML Resources, formerly Downer Mining, the largest contract mining and earthmoving organisation in Aotearoa; Dominion Salt, the sole producer and refiner of industrial, food, rural and pharmaceutical salt products in Aotearoa, jointly owned with Cerebos Greggs; the Levene Group retailing home decorating products; and Dunlop Flow Technology. In 1995 the Group was the 25th largest company in Aotearoa (ranked by turnover in Management, December 1995). Blue Star Group sold to US Office Products Company The office products retail and wholesale business has undergone a massive restructuring over the last few months, which has ended with it being controlled by three major companies, two of which are overseas owned. This month the OIC gave approval to US Office Products Company of the U.S.A. to acquire 51% of the Blue Star Group Ltd for an initially suppressed amount. That amount was released on appeal, in April 1997: $63,391,289. Blue Star started life as Panasonic Office Automation, owned by Fisher and Paykel Industries. The name was changed to Blue Star Automation and it was sold to former Xerox executive, Eric Watson, in 1993. He will still own 47% of the company. Since then Blue Star has acquired more than 25 companies and is Aotearoa’s largest supplier of telecommunications equipment, copiers and fax machines and the second largest supplier of office supplies, according to Watson. It employs 1,000 people operating out of 45 locations and claims over 50,000 business customers. Its recent acquisitions have included U-Bix Business Machines, Wang New Zealand (30%), Turners Office Products, and Boanas Print. Washington-based US Office Products is on an expansion spree itself, having recently bought 17 U.S. companies for $US136 million, and eyeing more companies in Australia and Aotearoa. It has a market capitalisation of about $NZ660 million and annual revenue forecast for the year of $NZ1.2 billion. The two main competitors to Blue Star/USOP are U.S.-controlled Corporate Express, and the old-established but several times restructured and expanded, Whitcoulls, which is currently the subject of a controversial buy-out by majority shareholder and chairman, Graeme Hart. Corporate Express, acting through its 51% owned Australian subsidiary, Corporate Express Australia, recently bought Berrymans, the last substantial independent stationer in the South Island, and Park Lane, a private Auckland stationery firm. It has announced its intention to “either buy a company or open an office in Wellington in the next two months to give it a national presence.” The names of the companies would eventually be changed to Corporate Express. Corporate Express Australia, which focuses on the high-volume end of the market, is here “to attack the market, but not decimate it” according to its managing director, Martin Chimes. The U.S. parent is the largest stationery company in the U.S.A. and the second largest in Canada with annual revenue of about $US2 billion and over 12,500 employees. The Australian operation is the largest there, and the company’s objective was to be number one or two globally. Like USOP, it has been buying up in a big way: in April it announced purchases of eight other companies in the U.K., Alaska and other parts of America. It recently bought a large courier company, US Delivery Systems for more than $600 million, and Richard Young Journal, America’s biggest distributor of computer supplies. Corporate Express Australia was founded in 1987 by buying a New South Wales company, Macquarie Office. It now has 1,100 staff, 35 sites and $365 million in revenue in Australasia. (Refs: Press, 9/3/96, “US Office Products expanding”, p.31; 14/3/96, “Blue Star captures 54% of U-Bix in takeover move”, p.29; 4/4/95, “Berrymans sale marks end of small NZ stationery retailers”, p.34; 9/4/96, “Blue Star planning further expansion”, p.32; 16/4/96, “Corporate Express plans NZ-wide stores”, p.32.) British Telecom takes 25% of Clear A British Telecommunications Plc subsidiary, Newgate (NZ) Holdings Ltd, has approval to acquire the 25% of Clear Communications Ltd currently owned by Bell Canada International Inc. The price is suppressed. The rest of Clear is owned by 25% each by Television New Zealand Ltd, The Todd Corporation Ltd (both of Aotearoa), and MCI Communications Corporation (U.S.A.). British Telecom is said to be strong in providing telecommunications to transnationals. Clear, the aggressive competitor to Telecom in its toll services, is increasingly involved in wider activities including Internet and data services, and is about to begin providing fibre optic to connect business customers directly to its exchanges in Auckland and Wellington. Tiongs take complete control of Regal Salmon Salmond Smith Biolab Ltd, which is owned by the Tiong Group of Malaysia has approval to buy the business and assets of Regal Salmon Ltd, of which it already owns 53%, for “approximately” $22,680,000. The sale includes eight hectares of land in Canterbury and 0.25 hectares in Marlborough. Salmond Smith owns Southern Ocean Seafoods and will combine the two operations, giving them 71% of the country’s farmed salmon output. “It is intended that new Asian markets particularly in Malaysia be developed.” Salmond Smith also has horticulture, food processing, scientific products and plasticware divisions. See the commentary on August and September 1995 OIC decisions for further details. Hectare of Auckland CBD land sold to Singapore company for $12m The ubiquitous Stanley Tan (Singapore, 80%) and George Horsburgh (Aotearoa, 20%) have approval to buy up an unimproved 1.03 hectares of land currently being used as a car park in central Auckland. It is “most of the land” bounded by Queen, Turner and Liverpool Streets and City Road. The price is “approximately” $12 million. They are buying it through their company Entwistle Enterprises (owned in the above proportions) from Mainzeal Group Ltd which itself became an overseas company only in April 1995, being 51% owned by Richina Equity Trust of China. Tan and Horsburgh propose to develop the property “with a view to a possible mixed use development combining both residential and commercial aspects”. They are behind the varyingly successful Pacific Group Ltd, The Habitat Group, Firle Holdings Ltd, New Zealand Land Ltd, Dynasty Pacific and other hotel and property development companies. More land bought to extend the Waihi gold mine More land is being acquired for the Waihi Gold Mine in and around Waihi. The purchase of three blocks of residential land has been approved, the first of which is being purchased from the Crown, the others from private individuals: 0.1012 hectares at 2 and 4 Haszard Street for $95,000; 1.2040 hectares in Matangia Road for $194,000; and 0.4048 hectares at 3 Pitt St for $175,000. The purchases are all by Waihi Gold Company Nominees Ltd of Australia, which “holds rural and urban land in and around Waihi as trustee for the participants in the Waihi Gold Mining joint venture.” It is owned 28.35% each by Waihi Mines Ltd and Welcome Gold Mines Ltd, 27.84% by AUAG Resources Ltd, and 15.46% by Martha Mining Ltd. All of these companies are Australian owned except AUAG Resources, which is owned in Aotearoa.
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