January 2002 decisionsJapanese restaurant chain serving Italian food to manufacture food in Auckland Paloma of Japan buys Southcorp Water Heaters from Southcorp of Australia Palmerston North equestrian centre purchased by U.K. pension fund U.S. buyers of 4,000 ha. station at Conway Hills, North Canterbury for forestry U.K. wine merchants and property developers buy Akaroa holiday home Venezuelan buys further land near Whakatane in joint venture
Japanese restaurant chain serving Italian food to manufacture food in AucklandSaizeriya Australia Pty Limited of Japan has approval to acquire 2.3 hectares at 50 Luke Street, Otahuhu, Auckland for $3,800,000 from MFL Mutual Fund Limited of Aotearoa.
“The Applicant is a Japanese company that operates a chain of 500 restaurants specialising in Italian food. The Applicant operates a vertically integrated total system and procures ingredients directly from around the world and currently has processing plants in Japan and Australia. The Applicant proposes to establish a food manufacturing plant on the property and export all manufactured products to the chain of restaurants in Japan. The establishment of a further processing plant benefits the applicant by reducing purchasing costs of processed foods that have been dependent on supply from outside makers, and reduces in-restaurant costs by centralising processing. The expansion of processing into New Zealand allows the Applicant to achieve risk diversification and reduces inventories due to seasonal differences.”
The Auckland plant may be the result of a bitter industrial dispute in Melbourne.
Saizeriya announced that it would build a $40 million food processing and packaging plant at Melton, in outer Melbourne, Australia, in 2000. At that time it was described by the “world’s largest chain of Italian restaurants” by the Victorian Minister for State and Regional Development, John Brumby, whose government had provided it with free land. He said that all the ingredients used in the plant would be sourced from Victorian producers (Media Release, 23/8/00, “Major Jobs Win for Melton as Global Food Company Invests $40 million”, see http://www.dpc.vic.gov.au/domino/web_notes/newmedia.nsf).
However, by December 2001, the uncompleted plant was the centre of a battle with the Victorian Labor government over which union should cover building workers on the site, and the establishment of a work practice agreement. The Victorian government “mandated coverage of what would normally be an AMWU (Australian Manufacturing Workers Union) site to the National Union of Workers. The NUW is not known for its industrial militancy in Victoria. In retaliation for its exclusion, the Victorian AMWU organised bans on the building of the Saizeriya plant.” (Green Left Weekly, “Militant trade unionists under attack”, by Graham Matthews, 5/12/01, http://www.greenleft.org.au/back/2001/474/474p7c.htm).
Saizeriya was not entirely an innocent bystander. According to the Australian business think tank, the Institute of Public Affairs (IPA), “Saizeriya cast around to construct an enterprise agreement to cover labour issues. They entered discussions with the NUW and reached an agreement that was signed off in the Industrial Relations Commission (IRC).” IPA blamed the unions for the position in November 2001 where “Currently, the factory site is an empty shell and is more that 12 months behind schedule. Saizeriya has people to feed in its restaurants and cannot wait. It is having to move on.” It used this case to argue for changing “work culture” which was “neutering management” through “Enterprise Bargaining Agreements signed by some major food manufacturers [which] have effectively taken management decision-making away from local managers and transferred authority to the collective through a required committee” (“Take Away Take-Away: The Self-Induced Destruction of the Australian Food Manufacturing Industry (The second publication of the IPA’s Work Reform Unit, November 2001),” http://www.ipa.org.au/pubs/workreform/foodtext.html).
The standoff became highly political with questions in the Victorian parliament, government attempts to resolve the dispute, and claims by government officials that it could “shatter Victoria’s business reputation in Japan, the US and Europe” (“Victoria’s business reputation threatened by union struggle”,8/11/01, http://www.dialinfolink.com.au/articles/4f/0c008d4f.asp). After “crisis talks” in February 2002 between the Victorian Government, Yasuhiko Shogaki (president of Saizeriya) and the unions, the company agreed not to withdraw its investment (which by now had become $400 million over several years) from Melbourne. But the Liberal party opposition claimed that the union disruptions would lead to two other stages of the project being shifted to New Zealand. (The Age, “Crisis talks save $400m food plant”, 9/2/02; Australian Financial Review, “Victorian Liberals attack unions over disruptions”, 18/4/02).
Perhaps the Auckland plant is a result of the industrial dispute in Melbourne.
Saizeriya is the second-largest Japanese-owned “family restaurant” chain in Japan, second to the Skylark chain, which in turn is second to McDonalds in sales (“Japan investors feast on family restaurant shares”, 12/23/01, http://www.siamfuture.com/asiannews/asiannewstxt.asp?aid=2028). Paloma of Japan buys Southcorp Water Heaters from Southcorp of AustraliaPaloma Industries Ltd, owned by Paloma Co. Limited of Japan, has approval to acquire 6.0 hectares at 475A and 475B Rosebank Road, Avondale, Auckland for $21,108,819 from Southcorp Water Heaters NZ Limited, owned by Southcorp Limited of Australia.
Paloma Industries is trying to expand its Australasian market. It
“is a producer of gas and electric appliances. It manufactures and sells water heaters and other appliances in Japan and its products are sold throughout Asia, and in Australia and New Zealand through a distribution agreement with the vendor. Its major production plants are in Japan, USA, Canada and Mexico”.
The brands sold in this way are Rheem and Vulcan.
The seller, Southcorp,
“has expressed a desire to rationalise its business and operate exclusively in its core business of a wine producer and distributor and is therefore divesting other interests. This proposal is part of a transaction involving the business assets of the Australian and New Zealand group that manufactures gas, electric and solar water heaters primarily for residential use and is a market leader in both New Zealand and Australia. The New Zealand business is the main source of the element component of the water heaters which are exported into Australia for use in the Australian manufacturing lines and as such is an integral part of the Australasian business.”
The total price for the Australasian sale was A$540 million (Media release by Southcorp, “Southcorp sells Australasian water heater business to Paloma for $540 million”, 11/12/01, http://www.southcorp.com.au/news/AnnouncementFinal.pdf).
There are technicalities involving the land:
“The sale and purchase agreement contains a clause relating to the subdivision of the land at Rosebank Road into 3 lots. Two of the lots comprising 3.914 hectares will be retained by the Applicant while the other lot will be sold to the current tenant and occupier Visy Packaging Holdings Pty Limited. As a result of the subdivision an esplanade reserve of approximately 2,130 square metres will be created which will vest in Auckland City Council. This means that the land will no longer adjoin the foreshore. If the subdivision had occurred prior to the proposed acquisition by the Applicant of Southcorp Water Heaters Group then consent under the Overseas Investment Regulations would not have been required as it would not have involved land as defined in the Regulations.” Palmerston North equestrian centre purchased by U.K. pension fundDentons SIPP J A Napier, owned by J A Napier of the U.K., has approval to acquire 49 hectares at Tielcey Park, Fitzherbert East Road, Aokautere, Palmerston North, Manawatu for $1,552,500 from Williams Farm Limited and Tielcey Park Limited of Aotearoa.
What is a “SIPP” I hear you ask? “The Applicant is a pension scheme” according to the OIC. More importantly, it is the pension scheme
“of a person whose family members have considerable equestrian experience. The proposal is to acquire an existing equestrian centre near Palmerston North and to develop the existing facilities and services. Family members operate a saddlery business in New Zealand. The proposed purchase will assist the family to consolidate their equestrian and bloodstock expertise in a focused manner.
The subject property is considered to be one of the premier equestrian centres in New Zealand. Facilities include an indoor school, a large all weather outdoor school and small saddlery. The Applicant advises there is scope for increasing the activity with a more diverse range of competitions and facilities therefore increasing the size of the market.” U.S. buyers of 4,000 ha. station at Conway Hills, North Canterbury for forestryJPS, owned by the Soper and Wheeler Families of the U.S.A., has approval to acquire 4,146 hectares at Conway Hills, State Highway 1, RD, Parnassus, North Canterbury for $905,000 from TWG, RJ and RJC Harland of Aotearoa for forestry:
“The Applicant is part of a group that has been part of the California forest management scene since early in the 20th century. It currently manages 40,000 hectares in California. The group’s principal activity is the harvesting and management of trees for sale in the forest products industry.
The Applicant intends to own and manage the properties that it acquires. A feature of its investment strategy is the intention to invest in a range of species other than radiata pine, having had a long experience with a diverse range of commercial species in California including Douglas Fir, Californian Redwood, Ponderosa Pine, Incense Cedar and White Fir. The Applicant claims that these species grow well in New Zealand and command values many times higher than equivalent grades of radiata pine.
The Applicant intends to initially develop a commercial forest planted with redwood and douglas fir on 1,500 hectares of the property identified as having the suitable conditions for forestry. A further 1,000 hectares that is currently scrubland may be planted in the future depending on access, economic evaluations and resource consent. An area of 1,000 hectares of native bush will be maintained.” Other land for forestry· The Minkid Family Trust of Taiwan has approval to acquire 13 hectares at State Highway 22, Te Akau Road near Ngaruawahia, Waikato for $85,120 from the New Zealand Forestry Group Limited, which is owned 76% by Wesley Garratt of Aotearoa and 24% by J Hong of Taiwan. The trust is a member of the Brooklands Forest Group, which “has entered into an arrangement with New Zealand Forestry Group, to develop approximately 1200 hectares of land at Ngaruawahia”. These sales are like many in this and other regions organised by New Zealand Forestry Group, the last such sales being in December 2001, also in Ngaruawahia, with investors in the Brooklands Forest Group. The investors provide the money, while New Zealand Forestry Group manages the development of the forestry operation. Land for wine· Matua Valley Wines Limited, owned 51% by Beringer Blass Wine Estates Ltd, a subsidiary of Fosters Brewing Group Ltd of Australia, 23.275% each by The Ross Spence Family Trust and The William Ross Spence Family Trust of Aotearoa, and 2.45% by Mark Robertson and Jane Osborne of Aotearoa, has approval to acquire 25 hectares at Maraekakaho Road, Hastings, Hawkes Bay for $1,300,000 from Thorndale Trust of Aotearoa. Matua is “one of the top six New Zealand wine producers and is involved in all aspects of the winemaking process, from grape growing to wine making and distribution (both domestically and internationally). Its grape growing interests are located in Kumeu, Gisborne, Hawkes Bay and Marlborough and are owned by the Applicant or through contracted growers.” It wants to increase its supply of grapes. · Berridge Vineyard Estates Ltd, owned by Richard David Berridge of the U.S.A., has approval to acquire 129 hectares at State Highway 6, Wanaka Road, Cromwell, Otago for $1,265,625. He is “proposing to establish a viticultural operation in Otago and is looking at acquiring a number of properties within the locality”. This is the sixth property to be acquired and will be developed into “a premium Pinot Noir producing vineyard”. The grapes “are to be processed at a winery that the applicant is establishing on one of his other vineyard properties. It is intended that the wine will be marketed both locally and overseas, primarily in the United States where the applicant has extensive market connections.” Berridge’s last purchases were given approval by the OIC in October 2001, of 5.7 hectares and 1.8 hectares respectively at State Highway 6, Gibbston Valley, Queenstown, Otago (see our commentary for that month). U.K. wine merchants and property developers buy Akaroa holiday homeN T and S G Sibley of the U.K., have approval to acquire 0.89 hectares at 40 Selwyn Avenue, Akaroa, Canterbury for $830,000 from Estate A M Hutchinson of Aotearoa. They
“intend to purchase the residential property as a holiday home. They have a current property at 28 and 31 Hempleman Drive, Akaroa, at which they spend 12-16 weeks each year, which has become unsuitable on account that it is on a very steep section and they now intend to sell and purchase a more suitable property. The subject property is on a flat section and the Applicants propose to remove the existing cottage and build a substantial dwelling.”
The OIC’s approval is unusual. Non-residents buying a holiday home without any suggestion of productive investment being involved is usually outside the criteria for acceptance. The OIC has presumably been persuaded by the following, which opens a large loophole for future wealthy overseas buyers:
“… they see the property as an ideal base to oversee their significant New Zealand investments activities. They are the principal shareholders and directors of Corney & Barrow, wine merchants of London. As a result of the Applicants’ interest in New Zealand, Corney & Barrow import an increasing amount of wines from New Zealand and have exclusive distribution arrangements in the United Kingdom for Lofthouse, Cairnbrae and Giesen wines. Over the past two years Corney & Barrow have purchased 6,270 cases of wine valued in excess of $1,600,000. Corney & Barrow also import other wines from New Zealand which are sold on a non-exclusive basis.
Corney & Barrow are keen to further develop the importing of wine from New Zealand and particularly entering into exclusive distribution arrangements with the quality low volume specialist grower wines. The Applicants having a New Zealand residential base is likely to enhance the development of new distribution arrangements for other low volume, high quality New Zealand wineries.”
The Sibleys are also involved in property development: they “are also the owners of a residential development at Bangor Street, Christchurch at which a significant amount of development capital in site preparation has been invested. A substantial further amount of capital will be required to complete the residential development.” Venezuelan buys further land near Whakatane in joint ventureShadow Oak Hill Farm Limited, a joint venture owned by Alberto Finol of Venezuela (51%), and W. and D. Saunders of Aotearoa (49%), has approval to acquire 106 hectares at Mangaone Road, Braemar, near Whakatane, Bay of Plenty, for $1,406,250 from B & K Osborne Limited of Aotearoa. It is being purchased as a dairy run off, and is near the joint venture’s existing farm. In December 1996 we reported:
“In a deal apparently brokered by the New Zealand Dairy Board to smooth trade with Venezuela, Mr Alberto Finol of Caracas, Venezuela has approval to buy 109 hectares of land near Whakatane, Bay of Plenty for $2.3 million. “Mr Finol is involved in a joint venture business with the New Zealand Dairy Board which imports substantial quantities of dairy produce from New Zealand to Venezuela and the United States. The New Zealand Dairy Board is anxious to expand the existing business arrangement and views the acquisition as assisting in achieving that goal. It is stated that the proposal is a result of recommendation by the New Zealand Dairy Board that he expand his involvement and association with the New Zealand dairy industry.”
In September 1997, Finol was given permission to buy an adjoining further four hectares for “approximately $114,480”. Again, that was unusual because just two months previously, the OIC had refused permission for the same purchase. Finol was described as “the controlling owner of a substantial number of entities involved in the dairy business and trade”.
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