Foreign investment in Aotearoa/New Zealand

Overseas Investment Office – August 2013 Decisions

Americans Buy 27,000 Hectare Mt Pember Station

A busier month at the OIO with a number of significant decisions. Firstly Lees Valley Station LLC, United States of America (100%), received approval for the acquisition of:

a freehold interest in approximately 13,156 hectares (known as Kingsdown, Debourbles, Island Hills, Wharfdale and Okuku Hills); and
a pastoral leasehold interest in approximately 14,087 hectares (known as Mt Pember and Snowdale); being seven hill country properties collectively known as Lees Valley (or Mt Pember) Station, located in the Lees Valley, Canterbury. (“the Investment”). The vendor was Mt Pember Station Limited New Zealand (100%); consideration was confidential. The OIO states: “The Applicant will convert the land from a sheep, cattle and deer station to dairy support. The Applicant will commit significant funds to the development/improvement of the land”.

That may sound fine, but let’s be clear about what has fallen into foreign ownership: one of New Zealand’s largest farms! Tim Cronshaw and Liz McDonald reported on the deal in the Press 14/9/13) under the heading “US firm buys huge chunk of Canterbury”:

A massive farm the size of Christchurch has been sold to a North American investment group. The undisclosed price was believed by industry sources to be about $30 million. Mt Pember Station in the Lees Valley, about 85 kilometres northwest of the city, is among New Zealand’s largest farms at 27,242 hectares. It was sold by John and Bernice Ramsey, who also own Waikato meat-processing business Crusader Meats and have other farming interests in the North Island.

The farm is an amalgamation of seven runs and stations – Mt Pember, Wharfedale, Kingsdown, De Bourbles, Island Hills, Snowdale and Okuku Hills. The new owner is a New Zealand-registered North American company called Lees Valley Station, whose directors are three attorneys in Connecticut and South Dakota. Behind them is understood to be experienced American farm investors who have promised to commit significant funds to develop the property, running it as a New Zealand arm of their existing operations. Approval for the sale was given by the Overseas Investment Office (OIO) for the company to buy the property and about 30,000 livestock.

The deal drew fire from New Zealand First Leader Winston Peters, who said the Office had again betrayed New Zealanders. ‘The best way to destroy a nation and its people is to take away their land. History has proved this over and over again’, Peters said. About 3 to 4 per cent of rural pastoral land is foreign owned*. Federated Farmers President Bruce Wills said overseas investment was necessary and beneficial because of $51 billion of rural debt in New Zealand, but farmers would prefer farms remained in the hands of good farmers. The balance was about right as farm sales went through vigorous OIO analysis, he said. ‘We do have a love affair with debt and we are not good savers and, because of that, we rely on foreign investment. I would have to say in an ideal world our preference would be for Mt Pember to be sold to keen, competent Kiwi farmers, but… with a farm that big it would have to be somebody in a very strong financial position’.

The farm will be managed by Grasslands NZ, a farm management and consulting company and will continue to be run as grazing operation, chiefly for dairy support, sheep, and beef. Just over half of the property group is leasehold and it extends from developed flats to 8,000ha above 900 metres. Bayleys Canterbury agent Ben Turner said the domestic market was tested first before the owners accepted the overseas offer. Marketing details list the capital value in 2010 at $22.4m, including about $4m of improvements. The farm as it stands was created by LandCo Farming and includes 11 houses, five shearing sheds and many hay barns and storage sheds”.

(* See “Overseas Ownership Of Land: Far Greater Than The 1% The PM Claims”, by Bill Rosenberg, in Watchdog 129, April 2012.)

Americans Buy 4,000 Hectare Lilydale Station For Just $865 Per Hectare

RHL (Lilydale) Limited Recreation Holdings Limited, United States of America (100%), received approval for the acquisition of a freehold interest in approximately 4,046 hectares of land at 2035 Clayton Road, Fairlie, Canterbury (being Lilydale Station). The vendor was Donald Edgar Bray and Barbara Jane Bray, New Zealand (100%); consideration was $3,500,000 or just $865 per hectare! The OIO states: “The Applicant intends to develop a world class mountain bike trail business on the land”.

Matthew Littlewood in the Timaru Herald (1/10/13) reported on the sale:

Lilydale Station has been sold to an American-based tourism business for potentially a multimillion-dollar sum. Donald and Barbara Bray put the Fairlie station on the market more than five years ago. They initially hoped for a New Zealand buyer. However, Mr Bray confirmed Recreational Holdings had received approval to buy the 4046 hectare property from the Overseas Investment Office. ‘The buyer was very sensitive about the station’s iconic value and hopes to maintain much the same environment’, Mr Bray said. The station had been in the Bray family since 1912. Donald Bray’s grandfather, Sydney Bray, bought the land from the Crown in the late 1940s.

According to the Overseas Investment Office, the property’s “consideration value” was $3.5m. The regulator approved the sale on the grounds it would generate jobs, while it also took into account Recreational Holdings’ sensitive approach to the natural environment in its proposal. The Brays operate a recreational tourism business as well as farming the land but would not comment on the agreements reached with Recreational Holdings. ‘We’re not going anywhere for the foreseeable future. This land is in our blood and we know the new owners respect the place’, Mr Bray said.

The station also includes the Fox Peak Ski area. Fox Peak President Grant Keeley said the club had a long-term lease on the ski area. ‘At this stage, the club will continue as normal. What the new owners want to do with the rest of the land is up to them’, he said. Recreational Holdings’ New Zealand spokesman, Peter Fyfe, said it began negotiations with the Bray family about a year ago. He declined to give a history of the company, which the Overseas Investment Office lists as 100% American-owned. In February 2011, Recreational Holdings paid $480,000 for 36.4 ha in the Wairoa Gorge in Nelson to develop a mountain bike park and an accommodation lodge. ‘In due course, and when conditions are appropriate, Recreational Holdings intends to develop Lilydale Station in a similar manner to its Nelson property’, Mr Fyfe said…

Woolworths Makes An Ezibuy

Woolworths New Zealand Group Limited, Australian Public (98.5%), New Zealand Public (1%), and various overseas persons (0.5%), received approval for the acquisition of rights or interests in up to 100% of the shares of Ezibuy Holdings Limited (“EHL”), through the acquisition of EHL shares, and through the acquisition of 100% of the shares of Multichannel Holdings Limited which holds EHL shares through its subsidiary Multichannel Limited. The vendors were Existing shareholders of Ezibuy Holdings Limited and Multichannel Holdings Limited, New Zealand Public and Various Entities, New Zealand (55.2%), Catalyst Buyout Fund 1B Pty Limited, Australia (19.4%), Catalyst Buyout Fund 1A Pty Limited, Australia (19.4%), Catalyst Buyout Fund 1AB, Sweden (3.8%) and Judy Tania Skeczek, Australia (2.3%); consideration was $350,000,000.

The OIO states: “Woolworths New Zealand Group Limited wishes to acquire Ezibuy Holdings Limited. Woolworths New Zealand Group Limited (and its parent Woolworths Limited) own extensive supermarket operations in New Zealand and Australia respectively. Ezibuy Holdings Limited is a multichannel operator of fashion clothing and home décor in Australasia. Woolworths New Zealand Group Limited envisages the acquisition will enable an expansion of online sales to customers across Woolworths Limited’s New Zealand and Australian business and acceleration of apparel growth in its stores”.

Based in Palmerston North, it employs 500 people and dispatches 15,000 orders per day to customers throughout Australia and New Zealand. Richard Meadows at www.stuff.co.nz reports on the deal (22/8/13):

Aussie food giant Woolworths says it won’t be cannibalising EziBuy’s business, after snapping up the New Zealand fashion and homeware retailer in a $350 million deal. Woolworths is the parent company of Progressive Enterprises, which owns and operates the Countdown, Super Value and Fresh Choice supermarket chains in New Zealand. The deal is yet to be signed off by the Overseas Investment Office (OIO), but is understood to bypass competition watchdog the Commerce Commission.

While Woolworths has a direct selling business in Australia, Director of Group Retail Services, Penny Winn, said there would be ‘pretty much no cannibalisation. Our Countdown business doesn’t have a general merchandise offer at all, so from a New Zealand sense there’s no crossover whatsoever’. She promised that the Kiwi-owned business would continue to stand alone and retain its leadership team. ‘Woolworths has invested in this company because we see it as a great business with a great management team and a great strategy for growth’, Winn said. ‘Our position is very much backing that strategy and backing that team to grow the business further’.

EziBuy was founded in 1978, and has grown to become the largest fashion and homeware multi-channel store in Australasia. It sold more than $

Campaign Against Foreign Control of Aotearoa,
P.O. Box 2258
Christchurch.