Foreign investment in Aotearoa/New Zealand

Overseas Investment Office – October 2014 Decisions

Griffins Sold For Big Bikkies To New Philippine Owners

Another busy month at the OIO, the most significant approval in terms of notified value this month being URC New Zealand Finance Company Limited Philippines Public (84.1%) and Gokongwei Brothers Foundation Inc., Philippines (15.9%) receiving approval for the acquisition of rights or interests in 100% of the shares of NZ Snack Food Holdings Limited, the consideration of which exceeds $100m. Consideration was $750,000,000; the vendors were the existing shareholders in NZ Snack Food Holdings Limited United States Public (48.5%), various Overseas Persons (26.2%), Australian Public (14.4%), United Kingdom Public (6.6%), Management and Employees of Griffin’s Foods Limited, New Zealand (3.5%) and Griffin’s Share Scheme Trustee Limited, New Zealand (0.8%).

The OIO states: “The Applicant’s parent company Universal Robina Corporation and its subsidiaries have a large branded food product business in the Philippines and a growing presence in other Asian markets. NZ Snack Food Holdings Limited is a leading snack food company in New Zealand, and operates two plants for manufacturing its biscuits and salty/wrapped snacks. The Applicant envisages that the acquisition will provide an opportunity to acquire an established and well-managed fast moving consumer goods business in New Zealand, and allow the Applicant to acquire brands and intellectual property which can be utilised in the Applicant’s existing markets”.

Under the heading “Griffins Sold For Big Bikkies”, Michael Foreman backgrounds the deal in stuff.co.nz (20/7/14). “Kiwi biscuit-maker Griffin’s has been sold to Philippines-based food giant Universal Robina Corporation for $700 million. The sale by Griffin’s current owner, Australia-based Pacific Equity Partners (PEP), is subject to Overseas Investment Office approval. Griffin’s, which employs 800 people, produces Gingernuts, Cookie Bear, MallowPuffs, Eta Salty Snacks and Nice & Natural snack bars, from two factories in Auckland. It said URC had made a commitment to ‘invest in the local team’ to grow the business in New Zealand, Australia and Asia.

”’We believe Griffin’s is a natural strategic fit to our existing snack foods portfolio given its strong brand heritage in New Zealand, a country trusted worldwide in having high credibility when it comes to food quality, safety and authenticity’, said URC Chief Executive Lance Gokongwei. Following the deal Griffin’s Chief Operating Officer Alison Taylor would become Chief Executive and Executive Chairman Ron Vela would be retained as a consultant, Griffin’s said. Griffin’s said its products were sold in 20 countries and exports accounted for a third of the company’s revenue.

“The acquisition by URC would provide a distribution network in the Philippines, Vietnam, Thailand, Indonesia, Malaysia, Singapore, Hong Kong and China from which to drive export growth, Griffin’s said. Griffin & Sons was established in Nelson in 1895 and production was moved to Lower Hutt in 1938, with an additional factory in Papakura opening in 1967. PEP took over Griffin’s from French food group Danone in 2006 for $385 million. Two years later the company’s Lower Hutt factory was closed with the loss of 228 jobs.

“In 2007 Griffin’s acquired the Nice & Natural snacks business, making it the largest snacks manufacturer in New Zealand. URC, which was founded in 1954, claims to be the leading branded snack foods and beverage company in the Philippines. In its last financial year the company posted net income of 10.3 billion Philippine pesos ($272m) on revenue of 81b Philippine pesos”. See our May 2006 commentary for details of PEP’s purchase of Griffin’s from Danone.

Malaysians Restructure Their Interest In Opus International

In another significant decision Faber Group Berhad Malaysian Public (52.5%), Khazanah Nasional Berhad, Malaysia (34.3%) and various overseas persons (13.2%) has received approval for the acquisition of rights or interests in up to 100% of the shares of Opus Group Berhad, the consideration of which exceeds $100m. The asset value was stated at $255,239,367; the vendor was UEM Group Berhad Khazanah Nasional Berhad, Malaysia (100%). The OIO states: “Faber Group Berhad and UEM Group Berhad are undertaking an international transaction in which Faber Group Berhad will acquire the shares in Opus Group Berhad (which holds an interest in Opus International Consulting Limited in New Zealand)”.

Harvard Sells Some Forestry Interests To The Canadian Pension Fund

Public Sector Pension Investment Board Canadian Government (100%) received approval for the acquisition of rights or interests in shares in Kaingaroa Timberlands Limited (“Shares”) which will result in the Applicant holding up to 95.9% of the Class A shares (up from 49%), 58.7% of the Class B shares (up from 30%), 30% of the Class C shares (as currently held) and 62.8% of the (newly created) Class D shares of Kaingaroa Timberlands Limited which (through its undivided 61.2% partnership interest in Kaingaroa Timberlands Partnership) owns or controls:

a freehold interest in approximately 866.2 hectares of land at State Highway 5 Te Haroto, Hawkes Bay; and
a freehold interest in approximately 37 hectares of land at State Highway 38, Murupara, Kaingaroa Plains, Bay of Plenty; and
a leasehold interest in approximately 105.5 hectares of land at Dun Road, Kaingaroa Village, Rotorua District; and
a freehold interest in approximately 25.6 hectares of land at Taharua Road, Kaingaroa Plains, Bay of Plenty; and
a leasehold interest in approximately 79.6 hectares of land at 1102 Te Ngae Road, State Highway 30, Rotorua District; and
a freehold interest in approximately 266.3 hectares of land at Pikowai Road, Matata, Bay of Plenty; and
a freehold interest in approximately 542.4 hectares of land at State Highway 5, Waiotapu, Rotorua District.

Approval was also received for an overseas investment in significant business assets, being the Applicant’s acquisition of the Shares and interests in loans to related companies of Kaingaroa Timberlands Limited, the consideration for which exceeds $100m. The vendor was Phemus Corporation President and Fellows of Harvard College, United States of America (100%). Consideration was “withheld under section 9(2)(b)(ii) of the Official Information Act”. The OIO states: “The Applicant is currently a shareholder in Kaingaroa Timberlands Limited, a major investor in the Kaingaroa Timberlands forest. It is proposed that the Applicant will acquire the interest in Kaingaroa Timberlands Limited ultimately held by the President and Fellows of Harvard College. Guardians of New Zealand Superannuation, the Crown entity responsible for managing the New Zealand Superannuation Fund, which is the other major investor in the Kaingaroa Timberlands Forest, will increase its corporate governance of the Kaingaroa Timberlands Forest”. See our comprehensive October 2003 commentary for details of Harvard’s original purchase of Kaingaroa and April 2013 commentary for details of the pension fund’s original investment in these forests.

Solid Energy Sells Southland Dairy Farm To The Swiss

Dynamic Asset Management Company (Luxembourg) SA as manager of the DMC Fund FCP SIF (Luxembourg) Rentes Genevoises, Switzerland (99.6%) and Swiss Public (0.4%) has received approval for the acquisition of a freehold interest in approximately 248 hectares of land at 803 Terrace Road, Mataura, Southland. The vendor was Solid Energy Land Holdings Limited New Zealand Government, New Zealand (100%); consideration was $8,650,000.

The OIO states: “The Applicant, an investment manager for a Luxembourg-based investment fund, intends to acquire the land, which is an existing dairy farm, with the intention to develop it to increase its carrying capacity, productivity and profitability”. This deal appears to be part of a larger sell down by the cash strapped Solid Energy, weighed down by a mountain of debt and abandoning its Southland lignite project a couple of years ago. Collette Devlin in the Nelson Mail (8/5/14) reports on the various farm sales by Solid Energy.

“Solid Energy has sold its Southland dairy farms, but the State-owned company is yet to release the price it got. About 2,000 hectares of the Eastern Southland rural property was sold by tender. The properties included three dairy farms, two dairy support or conversion farms, and four properties considered as dairy support farms. The farms, ranging from 33ha to 399ha, were within a 5-kilometre radius between Mataura and Gore. Solid Energy bought the properties to secure access to the large lignite coal resource in the district, but no longer required the land.

“Solid Energy spokesman Bryn Somerville said there was strong interest in the land, with multiple offers. He would not say how much had been paid for the farms but Solid Energy was pleased with the return, he said. There were a variety of selling dates and all the money was not yet ‘in’ so he could not give a total value. However, it planned to report the vale of the sales at a later date. ‘[Solid Energy] is satisfied with the price and believed it got good value’, he said.

“PGG Wrightson Real Estate marketed the farms. General Manager Peter Newbold said the land sold at the upper end of the market and the properties met or exceeded price expectations. Interest in the properties was strong and the company received 100 requests for information packs, viewing the farms or attending open days. It received a total of 38 tenders for the farms. ‘Offering a number of farms for sale all at once like this can potentially cause an imbalance of supply and demand, therefore harming values. In this instance, that has not happened, and the prices offered were favourable, indicating the strong demand for Southland rural property is not letting up’, he said.

“Newbold said interest in the farms came from a broad range of potential buyers. ‘It was pleasing to see interest from potential buyers. In particular, the level of local interest demonstrated the strength of demand for dairy and dairy support property within the district, which was reinforced by corporate and international purchasers who also enquired after the farms’, he said”. See March 2014 commentary for details of this Luxembourg investor’s purchase of another 409 hectare dairy farm near Gore.

ANZ Terminals Sold

Helios Investment Australia Pty Limited Palisade Investment Partners Limited, Australia (32%), Colonial First State Global Asset Management, Australia (23%), Northleaf Capital Partners, Canada (23%), Fengate Capital Management, Canada (10%), Macquarie Capital Group Limited, Australia (10%), ANZ Terminals Pty Limited management, and various (2%) received approval for the Applicant’s acquisition of rights or interests in 100% of the issued share capital of ANZ Terminals Pty Limited which owns or controls: a leasehold interest in approximately 0.6 hectares of land at 8-34 Brigham Street, Auckland; and a freehold interest in approximately 1 hectare of land at 212-220 Gracefield Road, Hutt City, Wellington. The vendors were Existing Shareholders of ANZ Terminals Pty Limited United Kingdom (62.1%), United States of America (29.9%) and various (8%). The asset value was $44,133,000. The OIO simply states: “The Applicant will enable ANZ Terminals to continue to develop its core businesses”.

Aussies Take Stake In Acurity Health

Connor Healthcare Limited Austron Limited, New Zealand (75%) and Evolution Healthcare (NZ) Pty Ltd, Australia (25%) received approval for the acquisition of rights or interests in up to 100% of the shares of Acurity Health Group Limited which owns or controls:

a freehold interest in approximately 2.2 hectares of land at Churchill Drive, Crofton Downs; and
a freehold interest in approximately 1.3 hectares of land at 500 Southland Road, Hastings.

An overseas investment in significant business assets was also approved, being the Applicant’s acquisition of rights or interests in up to 100% of the shares of Acurity Health Group Limited, the consideration of which exceeds $100m. The vendors were Existing shareholders of Acurity Health Group Limited New Zealand Public (100%); consideration was $125,134,703. The OIO states: “The Applicant will be a subsidiary of Evolution Healthcare (NZ) Pty Ltd (‘Evolution’) and Austron Limited (‘Austron’). Both Evolution and Austron currently have an ownership interest in Acurity Health Group Limited, which is a private healthcare provider, including owning and operating private hospitals such as Bowen and Royston Hospitals. A takeover offer has been made for the remaining shares in Acurity Health Group Limited. The Applicant intends to introduce new systems to Acurity Health Group Limited’s hospitals to improve efficiency”.

Hamish McNicol at stuff.co.nz reports on the deal (19/12/14). “Private hospital firm Connor Healthcare has been granted clearance to take over listed company Acurity. Connor lodged a second application to the Commerce Commission to acquire the Wellington-based private healthcare provider on Wednesday, after the commission rejected its first proposal. The Commission said today it had given clearance for Connor to acquire Acurity, subject to Evolution selling down its shareholding after the takeover. Connor’s second proposal said Acurity would be 100% owned by Connor, and for a short period Connor would be 75% owned by Austron and the rest by Evolution Healthcare.

“Evolution would then sell down its shareholding in Connor to 11.7% within one month if the takeover was granted clearance. The parties will also make changes to Connor’s constitution. Commerce Commission Chairman Mark Berry said it was satisfied the acquisition would not substantially lessen competition under the new terms. ‘Evolution’s undertaking to divest some of its interest in Acurity will return its shareholding in Acurity to its pre-takeover shareholding of 11.7%,’ he said.

“‘We are satisfied that the divestment and the changes to the constitution the parties are making will maintain the status quo while allowing the takeover to proceed’. There was an option for Evolution to acquire more of an interest in the Acurity hospitals in the future, but any further acquisition would be conditional on the Commission’s clearance. Formerly Wakefield Health, Acurity has three private hospitals in Wellington and Hawke’s Bay. Evolution Healthcare, which owns Connor, operates Boulcott Hospital in Lower Hutt.

“The Commission had said the initial acquisition proposal would have left three of the four private hospitals in the Wellington region under common ownership. Only Southern Cross Hospital would be an independent competitor. Last week, Connor Healthcare said it was ‘committed’ to completing the takeover, but it faced a potentially difficult battle to overturn only the Commerce Commission’s third rejection of a takeover in the last five years. Connor’s bid for Acurity was increased to $7.25 a share in September and earned the support of the company’s independent directors, who called it a ‘very attractive price’.

“Connor Healthcare, established by the two principal shareholders in Acurity, originally made a bid in July of $6.50 a share to buy the remaining shares it did not own. It met with the Commerce Commission last Friday to discuss why the proposed acquisition had been declined. Last month, the takeover passed the 90% acceptance threshold it needed as part of the takeover. The deal had already gained consent from the Overseas Investment Office. Commerce Commission approval was the only remaining condition of the takeover, which has until December 22 to be declared unconditional”.

American-Owned Constellation Brands Expands In Marlborough

Constellation Brands New Zealand Limited Constellation Brands Inc, United States of America (100%) has received approval for the acquisition of a leasehold interest in approximately 308 hectares of land at Hunter, Pembers, Blind Creek and Rarangi Roads, Tuamarina Marlborough. The vendor was Awarua Farm Marlborough Limited and Philip John Woolley New Zealand (100%). Consideration was “withheld under section 9(2)(b)(ii) of the Official Information Act”.

The OIO states: “The Applicant is acquiring a leasehold interest in the land and intends to convert it into a vineyard. The grapes produced from the land will be used in the production of Kim Crawford, Nobilo and Monkey Bay wines which are the Applicant’s major export brands”. See our January, February, March, and May 2014 commentaries and our December 2013 commentary for details of other Constellation purchases in Marlborough.

Pernod Buys Back Marlborough Vineyard

Pernod Ricard Winemakers New Zealand Limited United States Public (31.2%), French Public (28.1%), various overseas persons (24.3%), United Kingdom Public (8.9%) and Belgium Public (7.5%) received approval for the acquisition of a freehold interest in approximately 148.3 hectares of land at 530 New Renwick Road, Marlborough. The vendor was Fairhall Vineyards Limited Brian Chang, Singapore (100.0%); consideration $16,389,000.

The OIO states: “In the 1990s Montana Wines Limited (now ultimately owned by Pernod Ricard SA, the parent company of the Applicant) sold the land to the Vendor and entered into a lease for the land. The land is currently a vineyard with the grapes used for the Applicant’s wine labels (such as Brancott Estate). The lease allowed for the Applicant to buy back the freehold for the land, and the Applicant has exercised the option to do so. The Applicant plans to further develop the vineyard and increase the number of vines on the land, which is likely to lead to an increase in the quantity of grapes produced on the land”. For details of other land purchases here by Pernod, see our commentaries for April 2004, August and October 2006, January and August 2008 and November 2010.

Matua Plans New Vineyard On Marlborough Council Land

And in yet another wine related approval in Marlborough, Treasury Wine Estates (Matua) Limited Australian Public (96.9%), various overseas persons (1.9%) and New Zealand Public (1.2%) received approval for the acquisition of a leasehold interest in approximately 24 hectares of land located at Giffords Road, Blenheim. The vendor was Marlborough District Council New Zealand (100%); consideration was stated at $18,917,850 over the 30 year term of the lease. The OIO states: “The Applicant intends to plant a vineyard on the land. The vineyard will provide further security of grape supply for the Applicant and will support the growth of the Applicant’s existing New Zealand wine business”. Given the value of the previous Pernod transaction, this seems an extraordinary amount of money for a 30 year lease over 24 hectares?

Other October Decisions

Hao Zeng and Qunhui Wu Qunhui Wu, China, People’s Republic of (50%) and Hao Zeng, China, People’s Republic of (50%) received approval for the acquisition of a freehold interest in 44.9 hectares of land at 29 Lakelands Road, Parua Bay, Whangarei. The vendor was Lois Dawn Tapp & Spire Trustees Limited Spire Trustees Limited, New Zealand (50%) and Lois Dawn Tapp, New Zealand (50%); consideration was $2,100,000. The OIO states: “Hao Zeng and Qunhui Wu will purchase the land as their new home. They intend to migrate to New Zealand and reside in New Zealand indefinitely”.

Johan Thomas Wahlgren Sweden (100%) received approval for the acquisition of a freehold interest in approximately 1.8 hectares of land located at Angler’s Lodge, Amodeo Bay, Coromandel. The vendor was Anglers Lodge (2003) Limited New Zealand (100%); consideration was $1,765,000. The OIO states: “The Applicant intends to purchase and operate Angler’s Lodge, a motel and holiday park located at Amodeo Bay, Coromandel. The Applicant and his family have applied for New Zealand permanent residency and intend to reside in New Zealand indefinitely”.

And, finally for October, Jeanne Nicole Bathgate and Ian Bathgate United Kingdom (100%) has received approval for the acquisition of a freehold interest in approximately 22.3 hectares of land at Old House Road, Upper Moutere, Nelson and a freehold interest in approximately 20.2 hectares of land at Old House Road, Upper Moutere, Nelson. The vendors were Thomas Gordon Hewetson New Zealand (100%) and Philip Arnold Jones, Sheryl Kathleen Jones and P & M Trustees (Jones) Ltd New Zealand (100%); consideration was $1,618,000. The OIO states: “The Applicants have applied for New Zealand permanent residence, intend to reside indefinitely in New Zealand and are acquiring the properties to establish a vineyard and to reside on”.

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