September 2001 decisionsBaycorp becomes Australian company after merger with Data Advantage Canterbury Meat Packers of Japan take over Phoenix Meat Company Banking consortium and Repco management buy Repco NZ’s business McCain Foods of Canada takes assets of Feilding Potato Storage Ltd Jossco of Australia re-leases Auckland’s only specialised grain storage facility Bridgestone/Firestone has new Auckland premises built by AMP for lease back Otamatapaio Station owners buy Holbrook, Rollesby and Glenrock Stations Part of Glenmore Station, Southland, sold to U.S. and Canadian investors U.K. company buys Pauatahanui land to prevent Anglicans subdividing
Remarkably, there were no deletions from the information released by the OIC on this month’s decisions – the first time this has occurred since January 1994. Baycorp becomes Australian company after merger with Data AdvantageApproval is given for the merger of Baycorp Holdings Ltd of Aotearoa and Data Advantage Ltd of Australia, which has led to New Zealand’s market leading credit reporting and on-line credit information company, Baycorp, becoming an Australian based and listed market leader, called Baycorp Advantage.
Baycorp already owned 9% of Data Advantage, and the two companies, along with Commonwealth Bank of Australia (CBA, owner of ASB Bank in Aotearoa) were equal partners in a joint venture company, Alliance Group which has an exclusive contract with the CBA to provide debt management services. CBA had a significant minority shareholding in both the merging companies and in the new company. Both Baycorp and Data Advantage had a similar market capitalisation – $1 billion and $879m ($A696 million) respectively – making the merged entity the 70th biggest Australian listed company (Press, 19/6/01, “Baycorp has eyes on D Advantage”, p.11).
Baycorp, in an excellent industry to do well out of bad times and increasing debt levels, has been a darling of the New Zealand sharemarket for several years, reflecting its consistently high growth in shareholder value (economic value added) and its domination of its field in Aotearoa. “Since it began trading in May 1994, Baycorp has handed investors the biggest returns of any company in New Zealand’s Top 40 Index”(Press, 21/7/01, “Merger may shift Baycorp to Sydney”, p.27; 20/10/01, “Baycorp offer for Data ‘fair’, p.25). Similarly, Data Advantage dominated the Australian consumer credit reporting market. Both are trying aggressively to expand their markets into Asia, assisted by IMF pressure on those countries since the 1997 financial crisis. Baycorp has a presence in Singapore and Malaysia, Data Advantage in Thailand. They have partnerships with U.S. credit transnationals, Dun and Bradstreet and Trans Union (which had a 5.3% shareholding in Data Advantage) (Press, 10/8/01, “Asia offers ‘blue sky opportunity’”, p.18).
In the final deal, Baycorp shareholders owned 58% of the new company, Baycorp Advantage, but whether control would stay with them was another story. Baycorp Advantage is about 56% Australian owned (and 65% overseas owned), has its headquarters in Sydney and primary sharemarket listing in Australia. For the moment, Baycorp’s chair, Roseanne Meo became chair of the new company (until an independent Australia-based replacement is appointed), and its chief executive, Keith McLaughlin, became the new managing director. Each of the two merging companies provided four directors to the new board. Baycorp’s shareholders did well financially out of the deal, though their company had been much more profitable with higher margins and return on equity. Data Advantage’s David Grafton became chief executive (Press, 8/8/01, “Baycorp and Data finally seal big deal”, p.32; “Partners have Asia in common”, p.30; 22/11/01, “Baycorp merger with Data gets go-ahead”, p.15).
Privacy issues should have created a strong public interest in the deal. The two companies specialise in collecting information about individuals, and provide it to prospective creditors (such as retailers) and to government departments assessing people for benefits and grants. The resulting databases are the companies’ most valuable asset and competitive advantage. Data Advantage is Australia’s biggest provider of credit data about individuals and companies, and Baycorp the biggest in Aotearoa (Press, 20/10/01, “Baycorp offer for Data ‘fair’”, p.25).
As Baycorp says on its own web site (see http://www.baycorp.co.nz/business_data/consumer.asp) that its databases hold information on “over 2.2 million New Zealanders”. It claims that because of the breadth of its coverage, both of individuals and creditors, it is turning up higher than the international average of adverse reports on people:
“Are Kiwis losing their scruples? Did you know that in the last 12 months, nearly 23% of consumer credit checks made produced an adverse report? By international standards, this percentage is high, and the trend does not seem to be decreasing. Why is it then that New Zealanders who are not meeting their financial obligations continue to apply for mortgages, credit cards, hire purchase or other credit? Is it possible they are not concerned with bad debt or whether they have a bad credit rating? Do those with an adverse credit history apply for more credit? Or is the rate higher simply because of the accuracy of our reporting?
We believe the high number of adverse reports could partly lie in the strength of our credit reporting system in New Zealand. By having one database of credit reporting history, we’re able to capture more information – especially when you consider that it’s used and supported by virtually every major credit provider in New Zealand. That, in conjunction with our extensive debt collection services, ensures the database is truly representative of consumers’ credit histories.”
Their databases are accessible seven days a week, increasingly using the Internet. “The databases accessed hold adverse data for a minimum of five years so clients can lend money or advance credit with extra confidence.”
Their database contains the following information on each of those 2.2 million New Zealanders: · Full name confirmation · Date of birth · Known alias names · Collection actions · Court judgments · Last three known addresses · Occupation and employer · Previous enquiries · Payment defaults · Public notices and file notes · Bankruptcy information
The mechanics of the approval were for Aqua Advantage (New Zealand) Ltd to acquire Baycorp for a price “to be advised”. Aqua Advantage is owned as follows:
80.95% – Australia, publicly listed minority shareholdings 10.44% – Australia, Commonwealth Bank of Australia 6.40% – Aotearoa, publicly listed minority shareholdings 1.48% – Germany, Deutsche Australia Limited 0.68% – Aotearoa, C R Bidwell 0.05% – Unknown, Unknown Overseas Persons
Baycorp Holdings had been 36.62% overseas owned, thus:
56.116% – Aotearoa, publicly listed minority shareholdings 15.73% – Germany, Deutsche Australia Limited 13.25% – Australia, Commonwealth Bank of Australia 7.26% – Aotearoa, C R Bidwell 7.144% – Australia, publicly listed minority shareholdings 0.5% – Unknown, Unknown Overseas Persons Canterbury Meat Packers of Japan take over Phoenix Meat CompanyIn the first of two decisions, Canterbury Meat Packers Ltd, which is controlled in Japan, has approval to take over the Greymouth–based Phoenix Meat Company Ltd for $22,754,760.
Canterbury Meat Packers is 20% owned by Phoenix and 80% by Asian New Zealand Meat Company Limited, a subsidiary of ANZCO Foods Ltd (formerly JANZ Investments Ltd). Effectively, ANZCO is buying Phoenix’s shares at Canterbury Meat Packer’s expense. Thus the second OIC decision is to approve Asian New Zealand Meat Company Limited taking 100% of the shares of Canterbury Meat Packers, for a sum “to be advised”.
The purchase includes a total of 1,046 hectares of land (though the two decisions give conflicting information on this aspect). It is made up of: · 595 hectares at Northpark Road, Seafield Road, and Christy’s Road, RD, Ashburton, Canterbury; · 25 hectares at Alabama Road, RD, Blenheim, Marlborough; · 174 hectares at State Highway 1, Greatford near Marton, Manawatu; · 5.7 hectares in Westland at Arnold Valley Road, Kokiri; Hokitika; and State Highway 6, Seaview; and · 246 hectares at Arnold Valley Road, Kokiri, Westland.
In 1995 Canterbury Meat Packers bought the Seafield assets of the failed Fortex Group Ltd. According to the OIC, it
“has been gradually developing a beef processing business since 1995 with facilities in Canterbury and Marlborough. It operates the former Fortex Group’s Seafield plant at Ashburton where it processes both sheep and beef and operates the former ‘Riverlands’ beef plant at Blenheim. The Applicant currently processes a significant percentage of the annual South Island export beef numbers. Approximately 760 people are employed at the Ashburton and Blenheim plants.”
In April 2001, the OIC gave it approval to acquire 174 hectares of land at State Highway 1, Greatford, near Marton, Manawatu, in order to “develop and extend the Applicant’s business with the construction of a third meat processing facility. The plant will be hi-tec and include the latest slaughtering, cutting and environmental technologies accessed from around the world.”
According to the Commerce Commission, whose approval was also required for the takeover,
“Phoenix is a meat processing company operating a beef plant in Koriri, Greymouth. As well as the processing plant, Phoenix also operates a domestic wholesale and retail operation. This is called Westmeat New Zealand Limited and includes a wholesale operation at Hokitika, and retail outlets in Nelson, Blenheim, Greymouth and Richmond, and a presence in Christchurch.”
The takeover is therefore of a beef processor, making Canterbury Meat Packers the biggest beef slaughterer in the South Island. Despite this, the Commerce Commission allowed the acquisition.
Ultimate overseas ownership of Canterbury Meat Packers before the takeover was 59.7% and was made up as follows according to the OIC:
39.0% – Japan, Itoham Foods Inc 20.3% – Japan, Nippon Suisan Kaisha Limited (“Nissui”) 0.4% – Japan, minority shareholdings 9.2% – Aotearoa, Janz Investments Ltd 7.6% – Aotearoa, Graeme Harrison 2.3% – Aotearoa, Barbara Harrison 21.2% – Aotearoa, minority shareholdings
That of Asian New Zealand Meat Company was
48.7% – Japan, Itoham Foods Inc 25.4% – Japan, Nippon Suisan Kaisha Limited (“Nissui”) 0.5% – Japan, minority shareholdings 11.5% – Aotearoa, Janz Investments Ltd 9.6% – Aotearoa, Graeme Harrison 2.8% – Aotearoa, Barbara Harrison 1.5% – Aotearoa, minority shareholdings Assuming that this is the final shareholding of Canterbury Meat Packers and Phoenix, they will be 74.6% overseas owned. Banking consortium and Repco management buy Repco NZ’s businessConsortiumCo, a consortium of Australian banks and Repco management, has approval to acquire the business of Repco NZ for a sum “to be advised” from Pacific Dunlop Holdings (N.Z.) Ltd, owned 99.9% by Pacific Dunlop Ltd (Australia) and 0.1% by Akron Tyre and Rubber Company of the U.S.A.
The consortium is 99.2% owned in Australia, as follows:
34.53% – Australia, GS Private Equity Pty Limited (part of the Grant Samuel Group) 34.53% – Australia, Gresham Partners Securities Limited 22.94% – Australia, Macquarie Bank Ltd 7.2% – Australia, Australian Management of Repco 0.8% – Aotearoa, New Zealand Management of Repco
“The acquisition of the business, and assets relating to the business, of Repco NZ from Pacific Dunlop is part of an international transaction involving Pacific Dunlop’s entire Pacific automotive business.
Repco NZ is the largest reseller in the New Zealand automotive aftermarket. It supplies automotive replacement parts and accessories, as well as automotive tools and equipment, to trade and retail customers through a network of stores. In addition, Repco NZ includes a wholesale business supplying to aftermarket resellers in the New Zealand market.
The overall rationale behind the acquisition is to improve Repco Australia’s performance by replicating the successful operational model of Repco NZ and in particular the dual stores format of retail and trade stores. The Applicant sees opportunities to further grow the business of Repco NZ.”
According to news reports, the consortium bought Automotive Parts Group (formerly Pacific Automotive) from Pacific Dunlop for $A251.5 million ($304.4 million). Pacific Dunlop made a book loss of $A97.7 million ($118.3 million) on the sale, though it may receive up to $A20 million ($24.2 million) more if the new entity performs to expectations over the next two years. The new company will be called Automotive Parts Group Holdings.
Pacific Dunlop sold the division after making a loss of $A139 million ($NZ168.2 million) in the previous year – largely due to write-downs of asset values and tax benefits. It had bought Repco from corporate raider Ariadne (a member of the 1980’s sharemarket frenzy club which later crashed) in 1988 for $A256 million ($310 million).
The consortium has $A68.5 million ($83 million) in additional funding provided by Credit Suisse First Boston to secure and develop the business. There are 406 stores under the Repco brand, and it also operates under the Ashdown and Motospecs brands. It has 3,900 employees and operates 11 distribution centres (Press, 24/9/01, “PacDunlop takes loss on sale of car parts group”, p.22). McCain Foods of Canada takes assets of Feilding Potato Storage LtdIn May 2001, McCain Foods (NZ) Ltd owned by the McCain Family of Canada, was given approval to acquire the potato and vegetable processing business at Feilding of Heinz-Wattie Ltd, owned by H. J. Heinz Company of the U.S.A., including “up to 25% of Feilding Potato Storage Ltd”. In the present decision, approval for McCains acquiring that shareholding has been changed to approval to acquire the assets of Feilding Potato Storage, for $4,400,000. See our commentary on the original decision for further details of McCain’s purchase. Jossco of Australia re-leases Auckland’s only specialised grain storage facilityJossco NZ Ltd, owned 50% by Andrew H.P. Joseph and 11.055% by Christopher Campbell Lane, both of Australia, and 27.89% by Terence James O’Connor and 11.055% by Edmund Francis Bailey, both of Aotearoa, has approval to acquire a lease over 0.8 hectares of land at 198 James Fletcher Drive, Otahuhu, Auckland from Commodity Storage Ltd of Aotearoa for $337,500.
“The property is the only specialised grain storage facility in Auckland. It is unique in its design and enables the applicant company to deliver a high level of biosecurity assurance to its customers and regulatory authorities.”
Jossco “imports and exports a wide range of agricultural based commodities” and already leases the storage facility for bulk grain storage and commercial offices. It wishes to renew the lease for up to another six years, which requires OIC consent.
“As it is a specialised facility, replacement would be almost impossible to achieve without building another similar facility. To relocate the operation would involve the lowering of biosecurity standards of the product stored, increased cost to the New Zealand industry because of lower capacity of available storage, and potential detrimental impact on business growth.” Bridgestone/Firestone has new Auckland premises built by AMP for lease backBridgestone/Firestone New Zealand Ltd, owned by Bridgestone Corporation of Japan, has approval to acquire 1.5 hectares of leasehold land at 40 Paisly Place, Mt Wellington, Auckland for $7,952,924 from AMP NZ Property Industrial Ltd, 89% owned in Australia. AMP is to design and build a new warehouse, storage and administrative building for lease to Bridgestone. The lease will be for nine years, with two rights of renewal, each of six years. Bridgestone has “outgrown its existing premises in Newmarket, Auckland”, which is Bridgestone’s head office in Aotearoa. It also owns a tyre factory in Christchurch. Land for forestry· Grandy Lake Forest (NZ) Ltd, owned 25% each by E., A., W., and D. Gemmingem of Germany, has approval to acquire 1,522 hectares of the Homestead Station, Lane Road, Mahia, Hawkes Bay for $2,925,000. Grandy intends to develop the land for “commercial forestry and intensive grazing”. The forestry operation will be managed utilising New Zealand expertise. “The forestry operation involves planting 950 hectares of Pinus Radiata, 100 hectares of Douglas Fir and 50 hectares of Cyprus Lustanica. The first cuttings are to be planted between May to June 2002. This is Grandy’s second investment in the New Zealand forestry sector. It “has indicated a long-term plan to establish 5,000 hectares of forestry plantation. Since 2000, the Applicant has developed 1,200 hectares of forest on its existing properties.” In July 2000, Grandy was given OIC approval to acquire 1,532 hectares of the Springhill Station, Mohaka Coach Road, Hawkes Bay for $1,464,975. The land, to be converted to forestry, was the “marginal” hill country part of the Station, which was being subdivided. The OIC said then that the Gemmingems “hold substantial forestry investments in north America and Germany and believe that Southern Hemisphere forestry investment gives balance to a global forestry portfolio”. Further investment may follow. · Blakely Pacific Ltd (as Trustee of the South Blakely Trust) owned by the Eddy Family of the U.S.A., has approval to acquire 112 hectares at Findlays and Cosy Corner Roads, Waianakarua, North Otago for $280,462. Blakely has substantial forest holdings in Aotearoa, and recently placed double-page advertisements about its exploits in major daily newspapers. We last heard from Blakely in November 2000 when it gained approval to acquire two blocks of land for forestry – 284 hectares near Rotorua and 806 hectares at Milton, Otago. See our commentary on that decision for further details. Land for wine· Montana Wines Ltd, now 96% owned by Allied Domecq PLC of the U.K. after a battle for control with Lion Nathan (see our commentary on the February 2001 decisions), has approval to acquire 80 hectares at Grovetown, Wairau Valley, near Blenheim, Marlborough, for $3,141,021 from A.E. Sadd Ltd and K.E. and S.L. Sadd, all of Aotearoa. It will be used for growing grapes and wine production. · Nobilo Wine Group Ltd, owned by BRL Hardy Ltd of Australia, has approval to acquire 95 hectares at Redwood Pass Road, Awatere Valley, Marlborough from Ugbrooke Ltd of Aotearoa for $3,600,000. Nobilo “wishes to acquire the property to further expand and develop its wine making and wine marketing activities. The property was previously used for farming. The Applicant plans to plant the property in sauvignon blanc wines.” · C.S. Frost and D. Cordeau of the U.S.A. have approval to acquire 25 hectares at Lowburn, on State Highway 6 between Cromwell and Wanaka, Otago from Amisfield Farm Ltd for $472,500. They “will contract out the vineyard establishment and management work to Lake Hayes Vineyards Limited and other viticultural specialists. The land will be planted in premium variety grapes, such as pinot noir, for which there is a fast growing demand. It is also anticipated that the land will be used for growing grapes for the production of methode champenoise. The Applicants may also enter into a premium grape supply contract with Lake Hayes Vineyard Limited.” Amisfield is owned 33.34% by Tusher Family Limited Partnership of the U.S.A., 33.33% by R.J. Hay of Aotearoa, and 33.33% by J.G. Darby of Aotearoa. In March 2001, Ross Trustees Ltd, owned by the Tusher Family Limited Partnership gained approval to acquire “28.0106 hectares of freehold comprising 12.9 hectares situated at Lowburn, Cromwell, Otago” (sic) for $930,000 from Amisfield Farm Ltd. Amisfield Farm Ltd was then owned 33% by the Tusher Family Limited Partnership, 25% each by R.J. Hay and J.G. Darby, and 8.5% each by West Block Ltd and Karearea Trust of Aotearoa. Lake Hayes Vineyards was to play a similar role as in the present decision. For further details, see our commentary on the March 2001 decision. Lake Hayes Vineyards is 33.3% owned by Sam Neill and family through their Korimako Trust. Otamatapaio Station owners buy Holbrook, Rollesby and Glenrock StationsOtamatapaio Station (1993) Ltd has approval to acquire 358 hectares of freehold and 13,699 hectares of Pastoral lease at Holbrook, Rollesby and Glenrock Stations, Burkes Pass, South Canterbury for $2,812,500 from Mr and Mrs France of Glenrock Station.
Otamatapaio Station (1993) Ltd is owned
· 34% by Reda International SA, “an Italian company involved in textile production with particular emphasis on high quality fine wool cloth”, owned by Luigi, Georgio and Roberto Botto Poala of Italy. · 33% by Lempriere (New Zealand) Limited, a subsidiary of Lempriere Holdings Pty Ltd, “an Australian wool buyer and broker with an emphasis on fine wools”, owned by Michael Raoul Lempriere and family of Australia; and · 33% by John and Heather Perriam, “leading merino breeders”, of Aotearoa.
These stations add to considerable land holdings already owned by the company.
In September 1993 the same partnership received approval to purchase the 9,110 hectare Otamatapaio Station, which is made up of 1,193 hectares freehold and 7,917 hectares leasehold, at Omarama. In April 1999, it received approval to purchase the 12,684 hectare Rugged Ridges Station at Kurow Road, Otamatata, Otago, which is pastoral lease. These two stations are nearby, in the Waitaki basin. For further details, see our commentary on the April 1999 decision.
According to the OIC, both of these existing properties
“have been developed as fine wool merino sheep stations. Since their acquisition the number of stock units and the amount of wool produced from each property has significantly increased.
It is intended that the property to be acquired will be farmed in conjunction with the Rugged Ridges and Otamatapaio properties. While the property being acquired is in the McKenzie Basin as opposed to the Waitaki valley, the properties are complementary and are able to be managed at a general manager level by the same person.
By increasing its scale, the Applicant’s purchasing power and flexibility will be enhanced. Bloodlines will be shared among all three properties. Specialist stock managers will be utilised more effectively. The geographic distance of being in a different river catchment means that, weather wise, there is a spread of risk which intensification of operations on the existing properties cannot achieve.” Part of Glenmore Station, Southland, sold to U.S. and Canadian investorsMari Hill Harpur of Canada and J.J. Hill III of the U.S.A. have approval to acquire 600 hectares of Glenmore Station, Northcoat Road, Garston, Southland for $506,250.
“The area being acquired is the hilly country of the station which is unsuitable for cultivation for either winter feed crops or for hay or silage. The Applicant will establish a commercial forestry operation primarily of Douglas Fir with a smaller area of Ponderosa Pine on the land.”
This land is “within 10km of Cainard Station” which the two received consent to acquire and convert to forestry in September 2000 (though Harpur was then described as being from U.S.A.). The sale will provide the vendors, D.G., C.A., G.J. and R.J. Hume, with funds to develop the remaining Glenmore Station.
In April 2000, the OIC approved T.R.D. and M.H. Harpur of Canada purchasing the 2,228 hectare Garondale Station, Peel Forest, South Canterbury, for $2,474,998. M.H. Harpur is the same Mari Hill Harpur in this Southland decision, but the OIC does not explain the change in nationality from Canada to the U.S.A. Garondale was used mainly for sheep and cattle farming and the Harpurs intended to develop a 1,400 hectare Douglas Fir forest on the property. They were already partners in a deer breeding business based at the nearby Peel Forest Estate. In September 2000, Mari Hill Harpur and J.J. Hill III of the U.S.A. were given approval to acquire the 4,297 hectare Cainard Station, 485, 515 and 533 Cainard Road, Southland for $2,025,000 from the government-owned Landcorp New Zealand. U.K. company buys Pauatahanui land to prevent Anglicans subdividingOberon Investments Ltd, owned by W.C. and M.D. Webb and Family of the U.K., has approval to acquire 2.7 hectares at Paekakariki Hill Road, Pauatahanui, Wellington for $260,000 from the Wellington Diocesan Board of Trustees on behalf of the St Albans Anglican Church at Pauatahanui. The purchase is the result of a dispute between Oberon and the St Albans Church:
“The property forms part of the land currently owned by the Wellington Diocesan Board of Trustees for the St Albans Anglican Church at Pauatahanui. St Albans has decided to subdivide the property and sell the part that is the subject of this application to fund other parish activities including maintenance of the church which is an historic building. The Applicant, which owns an adjoining 3.6175 hectare property, objected to the subdivision resource consent sought by St Albans. The objection was based on the loss of privacy, loss of views, reduced rural amenity values and the traffic that would likely to be generated by the developments post subdivision. Following discussions the two parties agreed for the Applicant to buy the land being subdivided. The Applicant intends to combine the land with their existing property. The existing property is leased out for agricultural purposes. It is proposed that the land being acquired will be amalgamated into the title of the existing property and will also be leased out for agricultural purposes [casual grazing].” Other rural land sales· Retrospective consent has been given to J.M. and D.A. Caldow of the U.K. acquiring 1.6 hectares at Headland Farm Park, Whangarei, Northland for $430,000, subject to “a number of conditions relating to the continued marketing and disposal of the property”. They “purchased the property in January 2000 for lifestyle purposes. The Caldows’ intentions were to use the property for life-style purposes and to reside on the property for six months of each year… The Applicant was unaware Overseas Investment Commission consent was required in this case. The Applicants have since separated and the property has been actively marketed since January 2001 in accordance with a matrimonial property agreement.” · R.B. and R.L. Jones of the U.S.A. have approval to acquire 20 hectares at State Highway 75, Banks Peninsula, Canterbury for $236,250. They “propose to take up New Zealand residency and reside on the property. They propose to purchase the land to build their family home. One-quarter of the land will remain as pasture with the remainder being returned to native bush. The Applicants are demonstrating a commitment to New Zealand through their intention to reside permanently in New Zealand.”
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