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December 1997 decisions Man, Mackay and CSR join forces in sugar refining E. D. and F. Man New Zealand Ltd (a subsidiary of E. D. and F. Man Group Ltd of the U.K.) and Mackay Sugar Co-operative Association Ltd each have approval to acquire 25% of Chelsea Investments Limited, which is owned by CSR Ltd of Australia. Chelsea Investments owns the Chelsea Sugar Refinery in Chelsea Bay, Birkenhead, Auckland, which includes a lease over approximately 48 hectares of land. In August 1992 we reported that a joint venture between Man and Mackay, later to be called Mackay Refined Sugar (MRS), was setting up in competition to the Chelsea Sugar Refinery, with the intention of importing sugar. NZPA reported that advising the new entrant was Sir Roger Douglas (along with his former press secretary and business associate, Bevan Burgess) who had deregulated the sugar market in 1986. In the event not much happened until 1994, when Mckay and Man completed their new refinery in Mackay, central Queensland. War between MRS and New Zealand Sugar (CSR’s local subsidiary) was declared, focusing on large commercial sugar users such as confectionary, soft drink and beer manufacturers. At risk were the jobs of 200 employees at the Chelsea Sugar Refinery – already reduced from 240 in redundancies by CSR. MRS set up a $1.6 million sugar warehouse at the port of Timaru and planned similar facilities elsewhere, saying it would use a purpose-built 20,000 tonne sugar carrier to bring the refined sugar from Australia. By the end of 1994, MRS was claiming more than $A50 million ($NZ60.75 million) against CSR for damages sustained in Australia and Aotearoa, alleging that CSR took “advantage of its substantial power in the refined sugar markets in order to prevent MRS entering those markets”. It claimed CSR had deliberately forward-sold sugar below cost. In Aotearoa, however, the Commerce Commission found no evidence of predatory pricing, despite CSR’s 85% share of the sugar market, and it was not until this finding in March 1996 that MRS considered court action here. “When we entered the market in 1994 we found New Zealand Sugar was quick to extend unusually long contracts to large multi-national users at surprisingly low prices,” its chief executive, James Proudlock, said. By that stage, MRS had put plans for a storage silo near the Port of Tauranga on hold, and had made only two voyages to Aotearoa of its bulk carrier. CSR had cut its refinery staff further, to 160, in part because it was cheaper to import some new products from Australia than produce them here. MRS started its legal action in Aotearoa in October 1996, seeking $11.3 million. CSR and MRS had planned a joint venture back in 1993, but were over-ruled by the Australian Trade Practices Commission. Now there is “an Australasian-wide rationalisation” of their refining operations:
The Commerce Commission investigated the merger after its announcement in June 1997, and the companies signed a deed preventing Chelsea Investments and MRS from mixing assets. By March 1998, a joint venture deal had been all but settled, only requiring Commerce Commission approval. It involved MRS paying $34 million to CSR, reflecting the value of CSR’s Australasian business and a settlement of legal actions in both countries. The combined joint venture in Australia is called Sugar Australia and is owned 50% by CSR and 25% each by Man and Mackay Sugar Co-operative. It includes both CSR’s and MRS’s refined sugar business in Australia. A similar deal in Aotearoa has Man and MacKay Sugar Co-operative each buying 25% of CSR’s refined sugar and retail pack businesses here. The joint venture represents only 15% of CSR’s total sugar business. However customers remained concerned. Cerebos Greggs, a major New Zealand Sugar customer, said that, while it might try to import its own sugar if necessary, that would not be easy, sugar being a low value, high volume commodity which requires special handling systems. (Press, 13/7/94, “Trans-Tasman sugar invasion threatens Chelsea Refinery”, p.29; 21/9/94, “Warehouse on schedule”, p.31; 9/12/94, “Mackay’s $A50m claim confirmed”, p.22; 6/3/96, “Chelsea sugar embroiled in $68m claim”, p.27; 9/10/96, “NZ Sugar Corp faces legal action”, p.28; 20/9/97, “Probe into sugar merger”, p.27; 24/9/97, “Concern over sugar merger”, p.26; 2/3/98, “CSR to get $34m in merger”, p.27; Independent, 8/3/97, “Sugar price war heads into bitter court battle”, p.9.) Xena and Hercules change hands It appears that the ownership of the two TV series, “Xena, Warrior Princess”, and “Hercules: The Legendary Journeys” is being split. In three related decisions, the OIC has given approval to BNZ Investments Ltd, Universal Television Enterprises Inc, and Shooting Star Pictures Inc, each to “acquire property being the copyright and other assets associated with” the two series. BNZ Investments is paying US$58,381,837, Universal is paying $US65,679,567, and Shooting Star is paying $US65,579,567. BNZ Investments, a subsidiary of the Bank of New Zealand Ltd, owned by National Australia Bank Ltd of Australia, is acquiring its share from Universal Television Enterprises. Universal Television Enterprises, a subsidiary of Universal Studios Inc, whose majority shareholder is The Seagram Company Ltd of the U.S.A., is acquiring its share from Screen Holdings Ltd and Iraklis Eleven Ltd, both subsidiaries of the BNZ. Shooting Star Pictures Inc is owned by Richard F. Reiner, a citizen of the U.S.A. and is acquiring its share also from Universal Television Enterprises. In each case it is stated that “The transactions form part of Universal’s strategy to produce and distribute films and television series both within New Zealand and world-wide.” The BNZ’s involvement is “to generate a return on capital, support the New Zealand film industry, and to provide further investment opportunities in the film industry”. Reiner’s involvement is “to facilitate and manage the investment made by BNZ Investments Limited”. Rexel of France buys GEC (New Zealand) and 37% of NZ Electric Lamp Rexel SA, 70.44% owned by Saprodis SA of France, has approval to acquire GEC (New Zealand) Ltd from its parent, General Electric Company Plc of the U.K. and 37% of New Zealand Electric Lamp Manufacturers Ltd for “a value in excess of the book value of the relevant companies”. It is not clear what the current ownership of New Zealand Electric Lamp Manufacturers is.
The deal is part of an agreement to buy the activities of GEC in both Australia and Aotearoa, which together have annual sales of about $466 million, of which $99 million is in Aotearoa (Press, 10/1/98, “Rexel takes GE arms”, p.23). Goodman Fielder’s Bluebird Foods buys Burn’s Philp’s NZ Food Industries Bluebird Foods Ltd, a subsidiary of Goodman Fielder Ltd of Australia, has approval to acquire New Zealand Food Industries Ltd from Burns Philp and Company Ltd of Australia for $677,089. The acquisition includes a 0.4446 hectare property at 60-66 Kingsford Smith St, Lyall Bay, Wellington. “The proposal represents part of the recently announced acquisition by Goodman Fielder Limited of the financially troubled Burns Philip and Company Ltd’s New Zealand and Australian consumer foods business…” The decision represents only a small part of the total deal between Goodman Fielder and Burns Philp. Goodman Fielder bought Burns Philp’s consumer foods businesses in Australia and Aotearoa for $27.38 million. In Aotearoa this constitutes Empire Foods in Wellington and Opco Foods in Auckland. Brands include Empire herbs and spices, Top Cook salad and cooking oils, Spice Islands marinades, Lavazza Italian coffee, Paul Newman’s Own range of dressings, pasta sauces and salads, Cornwell’s, Patak’s, Song Gai, Winn’s, and Chicken Easy. The sale was forced by Burns Philp (largest shareholder, Graeme Hart of Aotearoa) failing to sell its loss-making international herbs and spice business in September 1997, which they then proceeded to write down by $A700 million. The company owes $A1.3 billion to its banks and has breached its banking covenants as a result of the write-down. Its share price has crashed. (Press, 22/10/97, “GF adds to its brands”, p.30; 2/12/97, “Burns Philp sell-off”, p.29.) Credit Suisse buys Lucrum Holdings Credit Suisse First Boston, owned by Credit Suisse Group of Switzerland, has approval to acquire Lucrum Holdings Ltd, which is engaged in investment banking. The price has been suppressed. At about the time of this decision, CS First Boston announced that it was buying back the 75% of sharebroking firm and investment bank, First New Zealand Capital, that it did not own. Day-to-day management would remain the same. Whether this is connected to the present OIC decision is not clear. First New Zealand Capital was built on Jarden and Co which CS First Boston bought in 1990. In mid-1995 it sold 75% to senior management. According to its chief executive, First New Zealand Capital had raised more than $2.3 billion in corporate debt and advised on more than $16 billion of mergers and acquisitions involving New Zealand companies since 1992. This advice has included a number of privatisations and related advice to government. (Press, 17/12/97, “First NZ Capital sale”, p.32.) Taiwan-based Hawera Forest Owners Association buys 668 ha. land for forestry Members of the Hawera Forest Owners Association, consisting of “22 members, of which 17 are ‘overseas persons’”, has approval to acquire a total of 668 hectares of land at Morea Valley, Hawera, Taranaki for $2,805,600 for forestry. In fact there are 18, not 17, decisions approving purchase of blocks of land by the members, and each “member” appears to be one to five people in each instance: a total of 47 individuals. All are domiciled in Taiwan. The seller of the land is in each case New Zealand Forestry Group Ltd, and the OIC states that
The New Zealand Forestry Group appears to specialise in these modus operandi: it gets small-holders (often overseas) to buy small blocks of a larger block of land it owns, and then contract it to manage the land for forestry. It is the same company that has been selling land in Paparangi, Wanganui and elsewhere. The blocks sold in this case vary between 18 and 53 hectares. Ataidar Forests (U.S.A., Japan), takes Northern Pulp 435 ha. lease in Northland Ataidar Forests Ltd, 78% owned by a Carter Holt Harvey Ltd subsidiary and 22% by two Itochu Ltd subsidiaries, has approval to acquire the lease of 435 hectares of land in the Pungaru B30J2 Block, Northland for a “nominal” consideration. The acquisition is part of the debris of the failure of Northern Pulp Ltd.
The land is owned by “the Trustees of the Pungaru B30J2 Block”, and the block was “created by Partition Order of the Maori Land Court on 18/3/92 at Whangarei. The term of the lease is 45 years effective from 1/10/78.” We last heard of Ataidar (then spelt “Atadair”) in September 1996, when we reported:
The formal ownership of Ataidar (“radiata” spelt backwards!) is:
Until July 1997 (see our commentary for that month), South Wood Exports was 49% owned by the M.K. Hunt Foundation. Its main operations are owning and managing forests in Southland, largely for Southland Plantation Forest Company of New Zealand Ltd, which is ultimately owned by New Oji Paper Company Ltd and Itochu. U.S. firm buys Waikana Timber Company in Otautau, Southland Bright Wood NZ Ltd, whose shareholders are C.A., K.K., C.L. and D.R. Stovall, of Oregon, U.S.A., have approval to acquire the Waikana Timber Company Ltd for an originally suppressed price which was released in April 1998: $315,000. The purchase includes nine hectares of land in Eton St, Otautau, Southland.
Georges Michel, French winery business, buys Merlens Winery in Marlborough Georges Michel Ltd, owned by Georges Michel, a citizen of France and a resident of the Island of Reunion, has approval to acquire a vineyard owned by Merlens Winery Ltd (in receivership and liquidation) for $620,000. The property is six hectares of land in Rapaura Rd, Blenheim, Marlborough, and
John Coney of Canada, owner of Morton Wines, restructures Morton Estate Wines Ltd, trustee for the Morton Estate Wines Trust, whose principal beneficiaries are John Mark Coney and members of his family of Canada, has approval to acquire a total of 177 hectares of land from Ascross Investments Ltd in a “restructuring of John Coney’s New Zealand viticultural interests”. The land, whose value is put at $10,000,000, is made up as follows:
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