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TransAlta of Canada completes takeover of Wellington’s electricity supply TransAlta Energy Corporation (TEC), a subsidiary of TransAlta Corporation of Canada has approval to acquire up to 100% of Capital Energy Ltd from the Wellington City Council (WCC) for $90 million. In September 1995 we reported that TEC, through its subsidiary, TEC Utilities Ltd, had gained approval to take a further 21% shareholding in Hutt Valley electricity and gas supply company, EnergyDirect Corporation Ltd for $69,004,433. TEC at the time had “approximately 20%” of EnergyDirect and ended up with a 41% controlling interest after a considerable battle trying to persuade the local community. TransAlta also had management control of the neighbouring Wellington city power company, Capital Power, through a 49% shareholding. The WCC owned the other 51%. TransAlta was working towards merging the two companies and this now appears inevitable (Press, 26/6/96, “Cap Power move”, p.29). The WCC began a process of “consultation” with its citizens to see whether they wanted to sell the remaining 51% of Capital Power or merge it with EnergyDirect. The consultation was shown to be a sham. A “citizen’s jury” set up by the WCC to hear the case for and against the sale came down unanimously against it and 12-2 against the merger. In addition to a public meeting in protest, 12 Wellington ratepayers tried to block the sale in the High Court as an illegal decision by the WCC, but failed. Consumer finds that the WCC rates as one of the least popular local bodies in Aotearoa, and the Christchurch City Council, which has kept ownership of its utilities including its electricity supply company, rates the most popular. (Listener, 7/9/96, “A tale of two cities”, by Brian Easton, p.50; Press, 1/8/96, “Power sale not stopped”, p.36; Press, 20/3/96, “Cap power sale opposed”, p.28.) TransAlta also is one third of a consortium (with Fletcher Challenge and Auckland power company, Mercury Energy) which took over the construction of the controversial Stratford power station when Todd Petroleum and U.K. company National Power were forced to withdraw (see commentary on July 1995 OIC decisions). Capital Power also runs Nelson Electricity’s network. Murdoch gets approval to buy up to 32% of Sky TV In a decision which is a matter of considerable controversy, and which was originally completely suppressed, until released on appeal in December 1996, Independent Newspapers Ltd (INL) which is owned 49.53% by News Ltd of Australia, has approval to acquire “32.16% of the securities of and/or having the right to exercise or control the exercise of the voting power of and/or appoint or control the appointment of the board of directors of Sky Network Television Ltd“. The price was still suppressed in December 1996, and was not released until February 1998: $105,822,158. The desire by INL (which had been reported having an interest in buying TV2 if it were sold: Press, 17/8/96, “INL keen on TVNZ sale”, p.25) to buy into Sky led to a Commerce Commission investigation. This was on the grounds, not of cross-media ownership, but of other channels’ access to programming. Head of News Ltd, Rupert Murdoch has used the enormous buying power and size of News Ltd to corner major sports events, including rugby in Aotearoa, Australia, South Africa, England, Ireland, Scotland and Wales, Premier League Soccer in England, the Super League ruby league contest, the U.S. National Football League, and an interest in the baseball league. He has stated his intention to use these as a “battering ram” to achieve dominance in pay TV markets around the world. Predictably, the Commerce Commission limply decided not to interfere on the grounds that the links with News Ltd would not prevent other providers obtaining programming and the TV market in Aotearoa would remain competitive. This was on the basis that pay TV and free-to-air TV are the same market – a questionable assumption, certainly for those viewers who cannot afford pay TV. This is also despite the fact the News Ltd subsidiaries such as the Fox TV network in the U.S.A. also control other programming including movies and TV programmes. However other grounds for Commission intervention have not been ruled out and competitors such as U.S.-owned Saturn Communications cable TV operator may mount such a challenge, though it wants to distribute Sky programmes itself. Saturn’s owner, United International, also owns an Australian TV and programming company jointly with Murdoch’s Foxtel, and Australian telephone company, Telstra. (Press, 7/12/96, “Sky TV looms over Saturn’s future”, p.31; NZ Herald, 23/11/96, “Watchdog nod for INL buy into Sky”). Labour, the Alliance, and reportedly New Zealand First are calling for an inquiry into cross-media ownership. Regardless of the OIC approval, media reports before Christmas had INL with 80% of Sky TV already sewn up. Only TVNZ would remain as a shareholder, with 20%. 51.13% of the shares of Sky are owned by the so-called HKP Partnership of New Zealand. This partnership consists of the largest cable TV operator in the world, TeleCommunications Inc of the U.S.A. (through subsidiary TCI New Zealand Ltd), Time Warner of the U.S.A. (through subsidiary Time Warner New Zealand Ltd), and Bell Atlantic and Ameritech (controlling owners of Telecom). The other shareholders in Sky are Tappenden Construction (headed by Alan Gibbs and Trevor Farmer) 7.51%, Todd Communications (subsidiary of the Todd Corporation) 8.8%, U.S. sports TV network ESPN 0.41%, Craig Heatley and Terry Jarvis 15.85% between them, and TVNZ 16.3%. TVNZ was the only one refusing to sell (New Zealand Herald, 30/11/96, “Sky deal all but done”; Press, 4/1/97, “INL confident of sealing Sky deal this month”, p.49). The 32.16% approved by the OIC is the sum of the Aotearoa-resident shareholders other than TVNZ: Tappenden, Todd, Heatley and Jarvis. In March 1997 however, INL announced it had given up and the deal was off (Press, 1/3/97, “INL scraps bid to own Sky; investors left pondering”, p.25). News Corporation gets approval to buy Ansett New Zealand The News Corporation Ltd, described as an Australian public company, though controlled by Rupert Murdoch who is a U.S. citizen, has been given approval to acquire all of Ansett New Zealand Ltd. It already is 50% owned by News Corporation, the other 50% being owned by transport firm TNT Ltd of Australia. The price is suppressed and it is claimed that no land is involved. The purchase was part of the deal worked out to allow Air New Zealand to buy Ansett’s Australian parent company to get into the Australian domestic airline market. The Commerce Commission unsurprisingly saw that as dominance of the Aotearoa market. So News Corporation agreed to buy the Aotearoa arm of Ansett to allow Air New Zealand to buy the rest of its competitor. Several months of haggling were completed only in September (subject to Australian Foreign Investment Review Board approval) when it was announced that Air New Zealand would buy TNT’s 50% of Ansett Holdings of Australia for $A475 million ($NZ540 million). The $A475 million is made up of cash and loans, including increasing Ansett’s capital. News Corporation, which originally was going to sell to Air New Zealand, still may want to get out of Ansett, which has not been doing well, and some reports say it will sell its shareholding to a consortium of Australian institutional investors. The New Zealand Government allowed an increase in Air New Zealand’s foreign ownership for the deal in order to allow it to make a rights issue to shareholders to raise the required money. Air New Zealand has two classes of shares: class A can be held only by Aotearoa residents but class B can be held by anyone. When it was privatised in 1988, class B shares were limited to 35%. The government has increased that to 49%. Brierley Investments owns 42% of the shares, Qantas (Australia) 19.9%, and Japan Airlines (Japan) 5%. (Press, 3/9/96, “Air New Zealand to buy stake in Ansett Holdings of Australia”, p.3, “Air NZ, BIL may take Qantas stake”, 22/9/92.) It is interesting to speculate what this means for domestic travel in Aotearoa. Ansett New Zealand has only recently stopped making substantial annual losses. Can it now survive competition from an enlarged Air New Zealand without its parent’s purse being open to it? On the other hand, if News Corporation keeps its Ansett Holdings shareholding in partnership with Air New Zealand, will Air New Zealand really want to bankrupt News Corporation’s Aotearoa airline? Will Air New Zealand take advantage of a weakened Ansett New Zealand to allow prices to rise? How real will the domestic competition be? The deal is sure to get a good press: News Corporation also owns Independent Newspapers Ltd which owns newspapers covering nearly half the daily newspaper circulation in New Zealand and a large number of magazines (Press, 7/9/93, “‘Evening Mail’ sale cleared”). Noel Leeming merges with Bond and Bond Murray International (NZ) Ltd of Scotland, U.K. has approval to buy up to 41% of Noel Leeming Ltd, the national whitegoods, browngoods and electronic consumer goods retailer. Murray International is exchanging its shares in Bond and Bond for 17,581,000 Noel Leeming shares valued at 97.257 cents per share, putting the value of the transaction at $17,098,753. In June 1995, we reported that Noel Leeming became Singapore controlled by the purchase of about 38% of its shares by Lion City Holdings Pte Ltd, a private company controlled by the Jumabhoy family. Lion City had approval to buy 100%. Murray International will own 39% of the merged company combining Bond and Bond and Noel Leemings. The firm will be headquartered in Christchurch and have annual sales of about $350 million with about 750 staff. Plans by Lion City for Noel Leemings to expand into Singapore and Malaysia have been put on hold. The two chains will still retain their own identities. Fisher and Paykel withdrew its franchised whiteware other than cooking products from Noel Leeming because Bond and Bond sells other brands, so the new company will sell mainly overseas owned Simpson and Westinghouse whiteware. (Ref: Press, 15/6/96, “Chch base for appliance giant”, p.23; Press, 24/8/96, “Thumbs-up for Leeming’s deal”, p.21.) Susan sells herself: National Media Corp. (U.S.A.) buys Prestige Marketing National Media Corporation of the U.S.A. has approval to buy Prestige Marketing Ltd and Prestige Marketing International Ltd for US$4,234,574 cash and US$15,708,059 worth of National Media shares. The two companies belonged to the “queen” of infomercials in Aotearoa, Susan Barnes (also known as Suzanne Paul), and her business partner, Paul Meier. Barnes came from Wolverhampton four years ago and fronted her own TV commercials for Natural Glow makeup and Suzanne Clips. According to NZPA they sold the business for NZ$39 million. The OIC’s information puts the value at closer to NZ$30 million (US$19,942,633). (Press, 10/6/96, “Infomercial queen sells out for $40 million”, p.32.) According to National Media’s own publicity, National Media Corporation and its international subsidiary, Quantum International Ltd, represent the world’s largest publicly held infomercial company, and has sold over $900 million in products through “transactional television” in its ten year history. National Media claims its share of the world’s $1.5 billion infomercial business as approximately 20%. Due to rapid expansion in Asia (including a partnership with Mitsui in Japan), international revenues for the nine month period ended 31/12/95 were $113 million, up 133% from the prior period. National Media controls 2,800 half hour segments per week for infomercial viewing. More than 257 million global households in 60 countries have access to NM/Quantum infomercials available in 14 languages. It has 225 employees worldwide and “a product development organisation capable of screening 300 ideas per month generated by manufacturers and inventors. NM markets consumer products in a variety of categories including: automotive, fitness, kitchen, personal care, sports, self-improvement, and music. Some of our recent successes include: AB Roller Plus, Flying Lures, Royal DiamondTM Cookware, TouchlessTM Car Care System, hyG® Ionic Toothbrush.” (No, I’m not making this up: see http://wiredinvestor.com/NM396.htm.) In announcing the purchase of Prestige, National Media said that it had acquired Prestige Marketing (doing business in New Zealand and throughout Asia) and Suzanne Paul Pty Ltd (doing business in Australia). They had been formerly joint venture partners in New Zealand and Australia with Quantum International, a National Media subsidiary. It said the two companies are the two largest “direct response television” companies in Australia and New Zealand and were the two largest independent, direct response companies operating in the Pacific Rim. Together, the companies market more than 60 products directly, and in concert with their licensee (TV Media, an independent company not part of the transaction). Prestige Marketing and Suzanne Paul direct response television programming appears on 30 different networks in Australia, New Zealand, Hong Kong, Singapore, Malaysia, Indonesia, Thailand, the Philippines, South Africa, Fiji, Taiwan, Japan and Russia. (Ref: http://www.prnewswire.com/cgi-bin/readstory?PHTH002^May-30-1996–7:31:00:000AM^604644^1) What National Media weren’t quite so forthcoming about was some recent embarrassing incidents. On 26/3/96, the U.S. government Consumer Product Safety Commission announced:
Note when the juicers were sold: up to five years ago. According to National Media’s statutory quarterly report filed with the U.S. Securities and Exchange Commission for the period ended 31/12/95 (http://www.sec.gov/Archives/edgar/data/70412/0000950116-96-000080.txt), the CPSC notified the company in February 1994 that it had made a preliminary determination that the product presented a ‘substantial product hazard’ under the Consumer Product Safety Act. The CPSC staff requested the company to take voluntary corrective action but the Company disputed that the model in question presented a substantial product hazard. So it appears to have taken over two years for the company to agree to corrective action despite the injuries being caused. It also exposed its customers to credit card fraud when it sold or rented lists of its customers to other marketers, including credit card information without the customers’ knowledge or consent. On 2/4/96, the U.S. Federal Trade Commission announced:
National Media has been undergoing rapid expansion judging by recent press releases which announce: the acquisition of a number of companies; formation of a “pan-Asian company” with Mitsui and Company; beginning broadcasting in Indonesia (adding a claimed 11 million television households), the Philippines (3.1 million), Finland, Ecuador (one million), Malaysia (3 million), and Colombia (5 million); expanding its broadcasting in Holland, Germany, Japan (both broadcast and cable), French Canada, the Middle East and the Pacific; and extending its interests into the Internet (ref: http://www.prnewswire.com/cgi-bin/liststory?604644^1, news releases dated 11/9/95 to 13/8/96). US Office Products can buy remaining 49% of Blue Star Group In February 1996 we reported that US Office Products Company Inc had taken a 51% controlling interest in office products wholesaler and retailer, Blue Star Group Ltd. It now has the OIC’s approval to buy the remaining 49% from Blue Star’s founder, Eric John Watson of Aotearoa. As in February, the price was initially suppressed but released on appeal in May 1997: $64,635,298. In March, Blue Star acquired U-Bix Business Machines. Since then it has continued on its path of acquisitions. It has steadily increased its shareholding in Wang New Zealand to 83% (Press, 3/8/96, “Blue Star lifts Wang stake to 83%”, p.24) and is still buying. In July it bought Wallace Computer Supplies which has 40 staff and offices in Auckland, Wellington and Christchurch, and exports computer supplies to Australia (Press, 11/7/96, “Blue Star to buy Wallace Group”, p.28). Also in July, US Office Products itself bought Brocker Investments, the owner of information and technology company Sealcorp Computer Products and other investments in Australia and Aotearoa (Press, 6/7/96, “Blue Star owner bids for Brocker”, p.35). In August it bought the Australian office supplies company WC Penfold and the assets of Australian wholesaler, Office Warehouse. As with Wallace, no price has been made public (Press, 8/8/96, “Blue Star buys”, p.28). Meanwhile its competition has been trying to match the anti-competitive activity. In July, Blue Star’s other main competitor, U.S. owned Corporate Express Australia, bought Comdec, an Auckland-based computer supplies company, which would be merged with its Auckland business (Press, 5/7/96, “Comdec to Corp Express”, p.27). And in August, the Office Products Depot group announced a “strategic alliance” with two Australian chains, Office Products Promotions Co-operative and Office Network. The Aotearoa group is an owner-operated chain of 39 shops with a combined yearly turnover of $60 million. The new chain would unite 165 stores. The Blue Star takeover of Whitcoulls was cited as the reason for the move (Press, 2/8/96, “Stationery chains unite”, p.33). Emerald Capital of Canada controls ChCh Gondola and Rainbows End Emerald Capital Ltd, which is owned 87.5% by G. R. Gardiner of Canada and 12.5% by G. Cumming of Aotearoa, has approval to acquire 49% of New Zealand Experience Ltd for $2,700,000. New Zealand Experience owns the Mt Cavendish Gondola in Christchurch and Rainbows End adventure park in Auckland. As the OIC’s rationale states: “New Zealand Experience Ltd has had a troubled financial history particularly in respect of the Mt Cavendish Gondola.” In May it forecast a loss of $8.48 million for the year ended 30/6/96. This was mainly because of a huge write-down in the value of the Gondola from its development cost of $11.5 million to $2.89 million. The Gondola was a controversial project from the time it was first proposed in 1991 because of the intrusion it makes on the Summit Road reserve on Christchurch’s Port Hills, its threat to rare plant species in the area, and the continuous noise it makes in the Heathcote Valley. Predictions by the founding company as to how many tourists and locals it would attract were almost double what has been achieved (300,000 per year compared to 165,000 achieved), and high winds have affected its operation. In March 1996 its management staff were reduced from 11 to three. Rainbow’s End is more successful. The Gondola company was taken over from its founders by Christchurch businessman Malcolm North, who organised the merger with Rainbow’s End and then the buy-in by Emerald. According to the Press, after the present purchase of shares, Emerald will own 45% of the ordinary shares in the company, and Malcolm North 31.89%. Between them they will invest “just over $3 million” in the company which, with whatever is raised from subscriptions for new shares by minority shareholders, will be used to reduce its high debt level and fund development. The company owns 4 hectares of freehold land and 0.1 hectares of leasehold land in Canterbury, and 8 hectares of leasehold land in Auckland. (Ref: Press, 8/3/96, “NZ Experience writes down Chch Gondola”, p.16; 24/5/96, “Canadian group holds most of gondola owner”, p.16.) DEC International of the U.S.A. buys InterAg from Carter Holt Harvey In an originally completely suppressed decision released only in December 1996, DEC International Inc, a “privately owned multinational corporation based in the U.S.A.” has approval to purchase the assets of InterAg, a division of Carter Holt Harvey Ltd of the U.S.A. based in Hamilton. The price for the sale is still withheld. InterAg manufactures and sells a range of milking machines marketed under the brand Waikato Milking Systems. The Animal Health division of InterAg is involved in the manufacture and distribution of products with the brand name EAZI-BREED CIDR that control and stimulate the breeding cycle in production animals (InterAg home page, http://www.wave.co.nz/pages/interag/cidr.htm). DEC (not to be confused with computer multinational, Digital Equipment Corporation) is based in Madison, Wisconsin. Incorporated in 1947 as Dairy Equipment Company, DEC currently contains 15 operating units located in six countries manufacturing 43 different product lines (http://www.thermastor.com). It manufactures the Therma-Stor range of heating and ventilation equipment under several brands including the Rosenberg in-line tube ventilator (http://www.oikos.com/companies/DEC.htm) and also manufactures milking systems in its Boumatic division (http://www.emarkets.com/fpd/boumatic.htm). Wharepapa Station sold to U.S. owners of Wharekauhau Station and Lodge Wharepapa Station which covers 563 hectares in Palliser Bay, Southern Wairarapa, is being sold to the owners of the Wharekauhau Station and Lodge for “approximately” $2.7 million. Wharekauhau is owned by Wharekauhau Holdings Ltd (WHL) which owns 67% of Wharepapa Station Ltd, the other 33% being owned equally by William and Annette Shaw, the 10% owners of WHL and former owners of Wharekauhau Station. Wharekauhau Lodge and Farm was sold to four residents of the U.S.A. in order to “create one of the best and most exclusive lodges in the world” in November 1995 (see our commentary for that month). The lodge includes 931 hectares of land. The Shaws retained a 10% interest in the property and “have an ongoing involvement in the development and management of the property”. WHL is owned 24.9% by J. Davidson, 24.9% by A. Miller, 24.9% by M. Baybak, 15.3% by J. Sevo (all of the U.S.A.) and 10% by the Shaws. They paid $4,800,000 for the property through the company Wharekauhau Station Ltd. In November 1995, the OIC was “advised” that
This month’s approval extends this proposal whose “overall concept” is
We hope they will not be too forceful in “planting” the fauna. The new developments are said to provide “an exclusive retreat for diplomats and visiting heads of Government; … a corporate retreat/conference centre for the Southern North Island; … a high class tourist facility.” In April, NZPA reported that
KIPT buys Bellsouth Centre from Auckland Regional Services Trust Kiwi Income Property Trust (KIPT) has approval to acquire the Bellsouth Centre at 21 Pitt Street, Auckland from the Auckland Regional Services Trust for $31,500,000 in a decision originally completely suppressed but released on appeal in December 1996. KIPT is a “a New Zealand listed unit trust (with approximately 20% of the units held by various overseas persons) which is managed by Kiwi Income Properties Ltd which is owned 50% by FCMI Financial Corporation of Canada and 50% by R. Didsbury and R. Green of New Zealand.” Internatio Muller of the Netherlands buys Swift New Zealand from Burns Philp In an originally completely suppressed decision released on appeal only in December 1996, I-M Australia/New Zealand Pty Ltd, ultimately owned by Internatio Muller N.V. of the Netherlands, has approval to buy Swift New Zealand, a division of New Zealand Food Industries Ltd, owned by Burns Philp and Co. Ltd of Australia. Even in December 1996 the price was still suppressed, but it was released in February 1998: $8,806,000. In March 1995, ICI bought Chemical Cleaning Ltd from Burns Philp. Macraes Mining buys 2,260 hectares more land at Macraes Flat, Otago This decision was originally almost completely suppressed and released only in December 1996. Macraes Mining Company Ltd, which is “approximately 39%” owned by Union Gold Mining NL of Australia, and has a record for demanding the suppression of OIC decisions concerning it, gained approval to acquire 2,260 hectares of land at Macraes Flat, Otago for $3,500,000 as “part of the ongoing identification of gold resources at the Macraes Gold Project.”
Shell and BP form joint venture for fuel storage terminal in Wellington Shell New Zealand Ltd, ultimately owned by The “Shell” Transport and Trading Company Plc of the U.K. has approval to acquire a share of land “ranging between 30.8% and 48.2% (which may vary from time to time)” from BP Oil New Zealand Ltd for an amount originally suppressed but released in February 1998: $3,500,000. The land is seven hectares of leasehold land and 0.2 hectares of freehold land at Seaview in Hutt City, Wellington. “The proposal results from a decision by Shell and BP Oil New Zealand Ltd (who currently have a 100% interest in the land) to form an unincorporated joint venture to handle their terminalling activities in Wellington.” In case you naively thought this might reduce competition, “this joint venture will entail greater efficiency of operations and will thereby enhance the competitiveness of both companies compared to other oil marketers”. |
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