Foreign investment in Aotearoa/New Zealand
Overseas Investment Office – January 2009 Decisions
The Japanese Clearly Still Have Money To Spend
The January Decisions included two significant purchases of New Zealand businesses by large Japanese transnationals. Firstly, the Overseas Investment Office (OIO) has approved the acquisition by Itochu Corporation and Daiken Corporation, Japan (80.9996%), various (19.0004 ha. of a freehold interest in 159.1421 hectares of land at Upper Sefton Road and Lower Sefton Road in Canterbury, the site of a medium density fibreboard plant and significant local employer.
The vendor was Carter Holt Harvey Ltd, New Zealand (100%), which in turn is owned by Graeme Hart. While Mr Hart might be New Zealand’s richest man, when it comes to loyalty to his fellow Kiwis, he is clearly somewhat lower down on that list. Consideration for the deal is yet to be advised. Itochu is one of the largest companies in Japan and indeed the world with over 1,000 subsidiaries and associate companies operating in over 80 countries. In New Zealand Itochu has been a frequent applicant to the OIO, buying up or leasing significant tracts of land and forestry here (see OIO Decisions September 1996; July and December 1997; January, June, July and August 1998; August and November 1999; February, March, July and August 2000; February, April and July 2001). The OIO states, in the case of Itochu:
“The Applicant is the successful bidder in the sale process conducted by the Vendor in respect of the Vendor’s New Zealand medium density fibreboard (MDF) manufacturing plant at Rangiora (Business). The Applicant owns similar businesses in the wood products industry and considers that an investment in the Business would provide attractive integration opportunities at both a production and distribution level. In addition the export market for MDF has shown good price and volume growth in recent years and, subject to no significant burst of new capacity coming on stream, it is expected to maintain or improve this growth. The overseas investment transaction has satisfied the criteria in section 16 of the Overseas Investment Act 2005. The ‘substantial and identifiable benefit to New Zealand’ criteria were satisfied by particular reference to the following factors:
Overseas Investment Act 2005
- 17(2)(a)(i) – Creation/Retention of jobs
- 17(2)(a)(ii) – New technology or business skills
- 17(2)(a)(iii) – Increased export receipts
- 17(2)(a)(iv) – Added market competition/Productivity
- 17(2)(a)(v) – Additional investment for development purposes”
Time will tell whether the OIO’s faith in Itochu is well placed, as clearly Mr Hart had little faith in keeping it in Kiwi hands. Or was he simply cashing up for some bigger play elsewhere?
Decision # 200820030
Suntory Of Japan Buys Local Beverage Star From The French
The second approval in January involving a Japanese transnational was consent being granted under section 12(b) and section 13(1) (a) of the Overseas Investment Act 2005 for the overseas investment in sensitive land, being Suntory (NZ) Ltd‘s Japan (100%), acquisition of rights or interests in 100% of the shares of Danone Holdings NZ Limited which owns or controls:
- a freehold interest in 6.3907 hectares of land at 22 Orb Avenue and 97 Plunket Avenue, Manukau City, Auckland; and
- a leasehold interest in 0.2013 hectares of land at 99 Plunket Avenue, Manukau City, Auckland; and
- a leasehold interest in 10.2398 hectares of land at 80 Plunket Avenue, Manukau City, Auckland.
An overseas investment in significant business assets, being the Applicant’s acquisition of rights or interests in 100% of the shares of Danone Holdings NZ Limited, the value of the assets of Danone Holdings NZ Limited and its 25% or more subsidiaries being greater than $100 million. These assets are a number of Frucor subsidiaries, referred to as Frucor. The vendor was Danone Asia Pte Ltd France (100%). Consideration was stated as confidential in the published OIO Decision, but was reported by the National Business Review (24/10/08) as being $NZ1.3 billion. The NBR report stated that Suntory had beaten out fellow Japanese heavyweights Kirin and Asahi as well as Coca Cola Amatil in securing Frucor from the French.
Suntory (NZ) Ltd is a wholly-owned subsidiary of Suntory Limited, a company incorporated in Japan. Suntory Limited businesses include alcoholic beverages, food, non-alcoholic beverages operating in Japan, China, the United States of America, Europe and the Asia-Pacific region. In New Zealand, Suntory was previously involved in merging the fruit beverage interests of Cerebos Greggs (see Decisions, January 1997) and was involved in the sale of New Zealand’s’ only salt producer Dominion Salt, to the Aussies (see September 1996 Decisions). The OIO states, in approving this transaction, that:
“Danone Holdings NZ Limited (DHNZ) operates a beverage business which produces and distributes non-alcoholic ready to drink beverages in New Zealand though its subsidiaries Frucor Beverages Group Limited (Frucor), Frucor Beverages Limited (FBL), Frucor Beverages (Australia) Pty Limited, Arano Juices Limited and Frucor Soft Drinks Limited (together the Frucor Subsidiaries). Frucor produces, distributes, and/or licences non-alcoholic ready to drink beverages in New Zealand, Australia, South Africa and the Pacific Islands. The Applicant’s rationale in acquiring the business of Frucor is to strengthen and expand its parent company’s overseas business in the beverages industry. Since Suntory Limited made its first overseas acquisition in the United States of America in 1980, it has made a significant number of acquisitions and investments in order to expand its global footprint”.
The problem with expanding one’s global footprint is that more people and small businesses tend to get squashed! Danone has profited quite nicely since buying Frucor for nearly $300m in 2002. Frucor has some star beverage performers including V and Mizone. US business magazine Forbes named Frucor one of the world’s top 20 small businesses, chosen from more than 20,000 candidates. It’s a shame such a successful Kiwi company isn’t New Zealand-owned. Danone is completely departing our shores. It still owns Griffins.
Decision # 200821571
ING Buys Property Instead Of Paying Out Investors
ING New Zealand, currently under the spotlight for two shonky investment funds (the Diversified Yield and Regular Income Funds), clearly still has money to invest. This ongoing disgrace, in which its 49% owner ANZ steered many of its customers, was one of the main reasons ANZ almost won the 2008 Roger Award (the Judges’ Statement said: “The key charge against ANZ-National in 2008 was its reckless promotion to its banking customers of two investment funds run by its subsidiary ING NZ Ltd, which were then frozen, imprisoning $520 million of small investors’ money (Press, 29-30/3/08). The bank ducked responsibility on all fronts – for giving shonky advice, for misrepresenting ING as ‘low risk’, for failing to bail out its subsidiary to avoid the need to freeze funds, and for continuing to collect advisor fees during the freeze. While keeping the funds frozen, ING then announced a profit of $36 million (Press, 3/7/08). As a comprehensive case study of the rapacity and unconscionable behaviour at the expense of ordinary investors that have brought the reputation of Wall Street and its local clones to a new low, the ING saga stacks up well. ANZ has also been a central player in the Opus Prime insolvency in Australia, where again small investors were fleeced while the bank initially concealed crucial information and then looked after itself when the crash came (Press, 26/4/08; Australian Financial Review, 1-2/11/08). Only after the Banking Ombudsman became involved did ANZ-National begin paying off a few individual victims caught in the ING affair ‘on a goodwill basis’. ‘Goodwill’ in this context seems to mean good public relations rather than any real relief for the majority of burned investors”. Ed).
It received OIO approval to acquire rights or interests in 50% of the shareholding of ING Property Trust Management Limited which owns or controls:
- a freehold interest in 80.5740 hectares of land at 246-254 Richardsons Line, 7-31 El Prado Drive, 239-275 Railway Road, Palmerston North;
- a freehold interest in 2.7394 hectares of land at Semple Street, Elsdon, Titahi Bay;
- a freehold interest in 1.1092 hectares of land at 7-11 Maui Street, Pukete Industrial;
- a freehold interest in 1.1253 hectares of land at 2-20 Semple Street, Elsdon;
- a freehold interest in 0.2273 hectares of land at 1 Elizabeth Street, Tauranga;
- a freehold interest in 0.7404 hectares of land at 24 Catherine Street, Henderson;
- a freehold interest in 4.2504 hectares of land at 25A Edsel Street, 13-21 Montel Avenue, Henderson;
- a freehold interest in 5.1546 hectares of land at 140 Don McKinnon Drive, Albany;
- a freehold interest in 0.4482 hectares of land at 15 Maui Street, Pukete Industrial;
- a freehold interest in 1.0490 hectares of land at 792 Great South Road, Papatoetoe;
- a freehold interest in 1.0043 hectares of land at 94 Cryers Road, East Tamaki;
- a freehold interest in 1.1865 hectares of land at 50-52 Carrington Road, Point Chevalier-Mt Albert;
- a freehold interest in 0.9988 hectares of land at 119 Apollo Drive, Mairangi Bay;
- a freehold interest in 10.9604 hectares of land at Kioreroa Road, Toetoe, Whangarei;
- a freehold interest in 0.8658 hectares of land at Great South Road, Greenlane.
The vendor was Symphony Investments (2007) Ltd. Symphony is part of the Symphony Group which is connected to Colin Reynolds who was behind Chase Corporation, one of the more spectacular casualties of the October 1987 sharemarket “correction”. The price to be paid is to be advised. Perhaps this is because ING doesn’t know what it will have left in the cupboard after it settles its Diversified Yield and Regular Income Fund debacles with many hundred irate investors. The OIO states, in the case of ING New Zealand, that:
“The Applicant acquired 50% of ING Property Trust Management Limited’s (Trust Manager) securities in 2003 after entering a joint venture relationship with Symphony Investments Limited (since renamed following restructuring to Symphony Investments [2007] Limited [Vendor]). The Applicant obtained the Overseas Investment Office’s consent to that transaction. The Trust Manager is the joint venture vehicle through which the Applicant and the Vendor manage ING Property Trust’s assets.
“The application is only an overseas investment because of the Applicant’s control interest in the Trust Manager. Although the Trust Manager’s control of the Trust’s assets will increase as a result of the proposed investment, no change in the Property Trust’s beneficial ownership interest will occur. The consideration for the acquisition will be determined through a valuation process contained in the Agreement. The proposed investment is consistent with the Applicant’s investment strategy and profile. By acquiring the Vendor’s current 50% shareholding in the Trust Manager the Applicant will have greater freedom to implement its management policies and pursue its development strategies”.
What could those development strategies be? ING Property Trust has been a significant buyer of retirement villages here in Aotearoa (see Decisions, February 2009 and May 2007). Prior to that, it spent $283m in December 2003 purchasing 71 properties, and in May 2005 spent $286m buying a property portfolio from Urbus Properties. See the August 2005 Decisions for a detailed description as to how ING Property trust came about.
Decision # 200820001
Russian Billionaire Buys Northland Farm
Helena Bay Trustees Ltd as trustee of the Abramov Family Trust, Russia (100%), received OIO approval for the acquisition of rights or interests in 100% of the shares of Helena Bay Holdings Limited which owns or controls a freehold interest in 215.7449 hectares of land at Helena Bay Farm, Russell Road, RD4, Hikurangi, Northland, from Seel Nominees Limited as trustee for the RBO Family Trust New Zealand (100%). Consideration was $15,950,000. The OIO states, in the case of the Abramov Family Trust, that:
“The Abramov Family Trust intends to construct a high quality residence/lodge and ancillary buildings on the land. The Abramov Family Trust claims the lodge will be used by the owner and may be made available on a commercial basis to wealthy domestic and international clientele. In addition to the construction of the residence/lodge, the Abramov Family Trust will improve the farming business by the conversion of the farming operation from stock fattening to stock breeding. In addition, the Abramov Family Trust has committed to spend $250,000 to improve the quality of pasture, fencing, stockyards, troughs and service tracks. The Abramov Family Trust also intends to carry out a programme of environmental and historic preservation initiatives. The Abramov Family Trust believes the proposed acquisition is a financially attractive investment with substantial scope for development. The Abramov Family Trust also wishes to enhance and protect the flora and fauna on the land”.
Decision # 200720064
Israeli Billionaires Trade Interest In Walter Peak Station For $1
Shmuel Meitar, Israel (100%), received retrospective approval to buy rights or interests in 27.5% of the Interest of Walter Peak Joint Venture which owns or controls:
- a freehold interest in 373.5020 hectares of land at to acquire a 27.5% beneficial interest in Walter Peak Station; and
- a Crown pastoral lease in 25758.2410 hectares of land to acquire a 27.5% beneficial interest in Walter Peak Station. The vendor was Morris Kahn, Monaco (100%).
Consideration was $1 (see the October 1998 Decisions concerning Morris Kahn’s original purchase of his stake in Walter Peak). The OIO states:
“On 5 November 1998, consent was granted to Ian and Tonya Koblick, Benjamin Kahn, David Kahn and Morris Kahn and or their nominee(s) (including any trust the beneficiaries of which are the applicants and their respective families) to acquire a freehold estate or interest in approximately 375.5 hectares of land and a leasehold estate or interest in approximately 25,758 hectares of land, together known as Walter Peak Station, situated in Mt Nicholas Beach Bay Road, Lake Wakatipu, Queenstown.
“The consent granted on 5 November 1998 provided for the following beneficial ownership %ages: Ian and Tonya Koblick up to 33%, Benjamin Kahn up to 25%, David Kahn up to 25% and Morris Kahn up to 60%. Morris Kahn acquired his interest using a company, Mayfair Investment Limited an investment company beneficially owned by him and his long-term business partner, Shmuel Meitar (who was not referred to in the application for consent in 1998).
“The current beneficial ownership interests in Walter Peak Station are: Ian and Tonya Koblick 25%, Benjamin Kahn 10%, David Kahn 10%, Morris Kahn 27.5% and Shmuel Meitar 27.5%. Retrospective consent is sought in regard to the acquisition by Shmuel Meitar. The acquisition by Shmuel Meitar was likely to result in the provision of additional financial resources and environmental and sustainability interests”.
According to Forbes.com, Mr Meitar is the 30th richest person in Israel, so I am sure the purchase price of $1 was not too taxing for him. I hope he spends a bit more than that on the “environmental and sustainability interests”. While the OIO listed Mr Kahn as a Monaco citizen, according to Forbes.com, his nationality is Israeli and is listed as the 1014th richest person in the world.
Decision # 20081073
Dutch Share Shuffle In Rakaia
The OIO approved investment in sensitive land, being MCC Van Uden Holding BV (the applicant), Netherlands (100%), acquisition of a leasehold interest in 207.9174 hectares of land at 10 Hatfield Overdale Road, Rakaia. It also approved the Applicant’s acquisition of rights or interests in 100% of the shares of Bakker Bulbs Limited which owns or controls a freehold interest in 222.6074 hectares of land at 6 South Town Belt, Rakaia and 10 Hatfield Overdale Road, Rakaia (see June 2003 Decision re the original purchase by Bakker Bulbs). The sole shareholder of the Applicant is Mr van Uden who also holds 25% of the shares in CP Bakker Heerhugowaard BV, the parent company of Bakker Bulbs. The vendor was CP Bakker Heerhugowaard Holding BV Netherlands (100%) and Jacoba Anna Maria Bakker New Zealand (100%). Consideration was $3,242,755. The OIO states:
“Bakker Bulbs Limited (Bakker Bulbs) has previously received consent from the Overseas Investment Commission to acquire 222.6074 hectares of land situated near Rakaia, Canterbury. Bakker Bulbs is a subsidiary of CP Bakker Heerhugowaard Holdings BV, a flower grower/bulb producer with operations in the Netherlands and New Zealand. MCC Van Uden Holding BV (MCC Van Uden) proposes to acquire 100% of the shares in Bakker Bulbs.
“The proposed transactions are part of a business restructuring. The parent company of Bakker Bulbs, CP Bakker Heerhugowaard Holding BV had three subsidiaries: Nursery Ardea BV (Holland), Nursery A Bakker en Zn BV (Holland) and Bakker Bulbs Limited (New Zealand). From 31 May 1999 to 15 April 2008, Mr Van Uden had a 25% interest in CP Bakker Heerhugowaard Holding BV, and as part of a restructure involving his takeover of the business, the two Dutch subsidiaries were sold to MCC Van Uden Holding BV with agreement for the sale of Bakker Bulbs Ltd to MCC Van Uden Holding BV. Mr Van Uden also agreed to sell his 25% interest in CP Bakker Heerhugowaard Holding BV back to the company in a share buy-back arrangement”.
Decision # 200820014
Fletcher Extends Lease At Kumeu
Fletcher Distribution Limited, New Zealand (66.11%), Australia (33.56%), Various (0.29%), United States of America (0.04%), has received approval to acquire a leasehold interest in 2.1120 hectares of land at 110 Main Road Kumeu, by way of lease for a term of nine years less one day (including renewals), for $420,000 from PJM Wholesale Limited, New Zealand (100%). The OIO states:
“The Applicant currently leases the land pursuant to the existing lease (Lease) but is not entitled to exercise its rights of renewal under the Lease without first obtaining consent from the Overseas Investment Office to an acquisition of a leasehold interest in the land for a term exceeding three years. To ensure the continued success of PlaceMakers in Kumeu, the Applicant wishes to ensure that its ongoing tenure of the land is secured”.
Decision # 200820020
Indian Winemaker Increases Its Australasian Capacity.
Thachi Holdings Pty Limited, India (99.66%), various (0.34%) has received consent to acquire:
- a freehold interest in 20.2343 hectares of land at Old House Road, Upper Moutere, Nelson; and
- a freehold interest in 29.0229 hectares of land at 103 Best Road , Moutere Highway, Upper Moutere, Nelson.
The vendor was Pacific Trust, New Zealand (100%), consideration was confidential. Thachi is a subsidiary of Champagne Indage Limited (CIL), India’s’ largest wine company. In 2008 CIL had acquired Tandou Wines in Australia (Tandou was then renamed Thachi) and has since bought several other South Australian vineyards including Loxton and Vinecrest. The OIO states:
“The Applicant and other of CIL’s associated companies (together, the Indage Group), including the ultimate beneficial owner CIL, are in the business of winemaking and have been expanding their operations in Australasia. The Applicant, along with the rest of the Indage Group, aims to increase the export of Tasman Bay wines to the international market. The acquisition of the land and the business complement the Applicant’s existing operations in Australia, India and the United Kingdom and is part of the Indage Group’s strategy of expanding its interest in the wine making sectors into New Zealand”.
Decision # 200820025
A Confidential Decision
Apart from the shareholding of the applicant Australia (71.42%), Various (26.53%), United Kingdom (1.35%), New Zealand (0.35%), United States of America (0.35%), there is not much I can tell you about this OIO approval. The investment, consideration, applicant, and vendors (both NZ and overseas) were all deemed confidential by the OIO.
Decision # 200821565
Cement Transnational Gets More Cheap Land, This Time From You And I
The OIO has consented to further land purchases by Holcim New Zealand Ltd, Switzerland (60%), United Kingdom (20%), Various (10%), United States of America (10%). This time it is for the acquisition of a freehold interest in 2.2389 hectares of land at Limekiln Road, Moeraki, Palmerston for $19,350 from the Crown i.e. from us. This works out at $8,642.64 per hectare, or 86c per square metre! The OIO states:
“The relevant land is two small areas comprising surplus railway land formerly part of a branch line to the limeworks at Limekiln Road. In January 1994, all surplus railway land nationally was transferred to Land Information New Zealand, under the provisions of the New Zealand Railways Corporation Restructuring Act 1990, for disposal. The relevant land was included as part of the surplus railway land.
“Due to the size, shape and location of the relevant land it can only be disposed of to an adjoining land owner, which in this case is the Applicant. The disposal of the relevant land is conditional upon the relevant land being amalgamated with the Applicant’s land. The Applicant proposes to acquire the relevant land and amalgamate it with the adjoining land owned by the Applicant from which the Applicant operates a limestone quarry, burnt lime and agricultural lime business. The acquisition of the land by the Applicant will support the investment by the Applicant in the limestone quarry operated on the adjoining land. The acquisition of the land which is currently occupied by the Applicant will prevent any possible disruption to the Applicant’s operations and provide certainty of ownership”.
Holcim is the world’s second biggest cement maker, recently consolidating its dominance in this part of the world with the takeover of the Australian operations of Mexicos’ Cemex for A$2 billion. Holcim’s operations in New Zealand were formerly known as Milburn Cement. In December 2003, Holcim bought a 41% stake in Atlas Resources, a large Auckland based cement manufacturer. As you will see from the February Decisions as well as from several in the past (see Decisions in December 07; January 08 and June 08), Holcim has been actively buying up land in Weston, North Otago in anticipation of establishing a cement works there.
Decision # 200821570
Summary Statistics January 2009
All investments
| January 2009 | January 2008 | |
|---|---|---|
| Number of approvals | 10 | 10 |
| Net Investment $ | 28,890,270 | Confidential |
| Gross value of consideration | 32,412,004 | Confidential |
| Asset Value | Confidential | N/A |
Freehold land approved for sale
| January 2009 | January 2008 | |
|---|---|---|
| Number of approvals | 9 | 8 |
| Net land area (ha) | 538 | 272 |
| Gross land area (ha) | 1,139 | 324 |
Other interests in land approved for sale (for example leases and crown pastoral leases)
| January 2010 | January 2009 | |
|---|---|---|
| Number of approvals | 5 | 1 |
| Net land area (ha) | 2 | 22 |
| Gross land area (ha) | 25,980 | 22 |
Fishing Quota
As usual there was no fishing quota approved for sale this month.
Campaign Against Foreign Control of Aotearoa,
P.O. Box 2258
Christchurch.