Foreign investment in Aotearoa/New Zealand

Overseas Investment Office – November 2016 Decisions

NZ Part Of Giant Chemicals Merger

DowDuPont Inc (existing shareholders of EI Du Pont de Nemours & Co.; various 50%) was granted consent to acquire sensitive land and significant business assets, being 100% of Dow Chemical Co., which has approx. 275 hectares at:

2547 & 2661 Old West Coast Road, 233 Cooks Road, Addingtons Road, Darfield, Canterbury;
16 Sutton Road, Omata, Taranaki;
16 Beach Road, Otahuhu, Auckland; and
650 Kaipaki Road, Ohaupo, Waikato

The vendors are EI Du Pont de Nemours & Co. (USA Public 64.6%; various overseas 28%; European Public 4%; Canada Public 2.4%; Asian Public 1%) and Dow Chemical Co. (USA Public 60.7%; various overseas 29%; European Public 7%; Canada Public 2.3%; Asian Public 1%). Price approx. $364.1 million. This transfer of land and assets in New Zealand is an ownership shuffle as part of an all-stock global “merger of equals” between US companies EI Du Pont de Nemours and Dow Chemical, the result of which is the company applying for consent, DowDuPont, Inc.

In 2016, Dow had annual sales of $US48 billion in 40 countries, including agricultural chemicals in NZ. Du Pont began in 1802 with a French chemist producing gunpowder in Delaware and in 2014 was the world’s fourth largest chemical company, with revenue of $US36 billion. The merger involves consents in various countries and is currently being scrutinised by the European Union, but is expected to be final in 2017.

The intention is then to restructure into three independent publicly traded companies in agriculture, advanced materials and bio-based industrials (see our commentaries for September 1997 and December 2012 re Dow Chemical, and search our Website for mentions of Du Pont in regard to genetically engineered and hybrid seeds).

China Buys Up NZ Vitamins And Mussel Extract

Primavera Capital Fund II LP and Shanghai Pharmaceuticals Holding Co., Ltd (various overseas persons 36%; China Public 24%; Shanghai Industrial Investment (Holdings) Co. Ltd, Shanghai Shangshi (Group) Co. Ltd and Shanghai Pharmaceutical (Group) Co. Ltd 21%; USA Public 14%; Cayman Islands Public 5.28%) have consent for investment in significant business assets, being 100% of the shares of Vitaco Holdings Ltd (various overseas 36.75%; Australian Investors 25.86%; Westpac Banking Corporation, Australia 10.63%; BT Investment Management Ltd, Australia 9.87%; NZ Public 5.9%; UK Public 5.82%; Commonwealth Bank of Australia 5.17%), for $179.623 million as at June 2016.

The principal factors for the purchase are Vitaco’s market leading position, expansion initiatives and new product development and branding practices. The transaction satisfied the s.16 and s.18 criteria of the Overseas Investment Act 2005, with “substantial and identifiable benefit to New Zealand” under s.17(2)(a)(iv) added market competition/productivity, and regulations 28(a) consequential benefits; 28(b) key person in a key industry, 28(c) affect image, trade or international relations; 28(e) previous investments.

Vitaco’s stated mission is “to empower healthier lives by developing, manufacturing and marketing world-class nutrition products…vitamins and supplements, sports nutrition and health food”. Its NZ and Australian brands include Healtheries, Nutrilife and Biolane green lipped mussel extract, all marketed against NZ landscapes (see also our commentaries of March and November 2009 and April 2012 on Vitaco).

More NZ Wine In Hands Of Big Alcohol

Cloudy Bay Vineyards Ltd (Louis Vuitton Moet Hennessy, France 66%; Diageo Plc, UK 34%) has consent to acquire approx. 21.3 hectares at Jeffries Road, Blenheim from Staete Landt Wine Co. Ltd (Rudi Arie Maasdam, NZ 75.24%; Anthony Michael Graham Swift, UK 12.38%; Graham Nicholas Hazell, UK 12.38%). Price was $4,945,000.

Cloudy Bay is a long-established operator of vineyards and wineries in Marlborough and Central Otago and is acquiring this land to meet increasing export demand for sauvignon blanc and pinot noir. The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with “substantial and identifiable benefit to New Zealand” under s.17(2)(a)(iii) increased export receipts, s.17(2)(a)(iv) greater efficiency/productivity, s.17(2)(a)(v) additional investment for development purposes, s.17(2)(a)(vi) – increased processing of primary products and under Regulations 28(e) – Previous investments.

This is an example of further consolidation of NZ wine-growing into ownership by the world’s largest alcohol companies. Cloudy Bay was the first big wine operation to buy into Central Otago, acquiring the Northburn vineyard in 2013 and, more recently, a portion of Calvert vineyard in Bannockburn (see also our commentaries of June 2015, December 2014, April 2014, April 2007, March 2008, July 2002, November 2000, October 1994 on Cloudy Bay).

Dutch Transnational Buys Bell Tea And Coffee

Jacobs Douwe Egberts AU Pty Ltd (various overseas 45%; US Public 29%, Australian Public 25%, Canadan Public 0.4%) has consent to acquire significant business assets being 100% of the shares of BrewGroup Ltd, which has approx. 1.4 hectares of leasehold land at 43 Crooks Road, East Tamaki. The vendor is BTCC Finance Ltd (Pencarrow IV Investment Fund LP, NZ 48%; PPEM Nominees Ltd, NZ 31%, NZ Public 16.44%; CEO Mark Alan Hamilton, NZ 4.54%). Price was $110,250,000.

Jacobs Douwe Egberts seeks to acquire the BrewGroup as a business complementary to its own and intends to grow the BrewGroup’s brands in New Zealand and overseas. It says the investment is likely to increase export receipts from European markets, add efficiency or productivity at the BrewGroup’s Auckland manufacturing facility and introduce additional capital into New Zealand for development. The transaction satisfied the s.16 and s.18 criteria of the Overseas Investment Act 2005 under s.17(2)(a)(iii) increased export receipts, s.17(2)(a)(iv) greater efficiency or productivity, s.17(2)(a)(v) additional investment for development purposes, and Regulation 28.(e) previous investments.

The purchaser is the Australian subsidiary of Jacobs Douwe Egberts BV, the world’s second largest coffee (Jacobs, Moccona) and tea company, based in the Netherlands and operating in over 100 countries. BrewGroup Ltd and its subsidiaries manufacture and sell tea and coffee in New Zealand and Australia. Its leading brands are Bell Tea, Jed’s Coffee, Gravity and Hummingbird Coffee.

The Bell Tea Company was established in Dunedin in 1895. In 2006, it bought New Zealand’s largest locally-owned coffee roaster, Burton Hollis, and changed its name to BrewGroup as coffee sales outstripped tea sales. By late 2013 it was owned by Foodstuffs who sold it to Pencarrow Equity. In 2016, it acquired Hummingbird Coffee (see also our commentary of June 2015 re Jacobs Douwe Egberts).

More Tegel Chicken In New Plymouth

Tegel Foods Ltd (US Public 23%, various overseas 37%, Singapore Public 8.4%, NZ Public 31%) has consent to acquire 40.4505 hectares of land at Tikorangi Road East, Tikorangi, New Plymouth from Paul Gerard Bourke, Bernadette May Bourke and Clonlara 2004 Ltd as trustees of the Bourke Otararoa Trust (NZ 100%). Price was $46,030,500.

Tegel wishes to increase its chicken production and intends to build and operate a new breeder farm on the land. The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005 re “substantial and identifiable benefit to New Zealand” under s.17(2)(a)(i) jobs, s.17(2)(a)(iii) increased export receipts, s.17(2)(a)(iv) greater efficiency/productivity, s. 17(2)(a)(vi) increased processing of primary products, and Regulations 28(e) previous investments and 28(j) oversight and participation by New Zealanders.

Tegel is one of Taranaki’s largest employers. In 2014, it was fined nearly $50,000 after a worker’s hand was trapped in a conveyor belt that lacked a safety guard despite the need for this being identified by an audit four years earlier. Similar conveyors in Tegel’s other plants were “accidents waiting to happen”, said the judge (see also commentaries of April 1997, October 1999, November 2000, March 2006, February 2008, September 2008, April 2010, February 2011, May 2013 and July 2016 for Tegel’s ownership history).

Kestrel Capital Increases Shares To Half Of Tru-Test Agri-Tech

KTT Ltd Partnership (Australia 94%, NZ 3%, UK 3%) has consent to acquire up to a further 13.54% of the issued share capital of Tru-Test Corporation Ltd in one or more transactions, resulting in controlling up to 49% of issued share capital. The value of the assets of Tru-Test and its 25% or more subsidiaries is greater than $100m. The vendor is Ashweir Ltd (Australia 100%).

The consideration for the transfer shares is a partnership interest for Ashweir in KTT. KTT considers that the increased investment in Tru-Test Corporation Ltd, an agricultural technology company, will facilitate continued technological development, innovation, job growth and export growth. The transaction satisfied the s.18 criteria of the Overseas Investment Act 2005.

KTT is Kestrel Capital, ‘an independent, executive-owned growth company investor and developer, based in Sydney and involved in agri-tech, information technology, infrastructure services, medical devices and niche manufacturing. Kestrel Capital established the KTT Limited Partnership (KTT) in 2012 to acquiring shareholding in Tru-Test Corporation Ltd, providing new equity. No details turned up for Ashweir Australia but there’s an Ashweir investment company in the UK and Channel Islands.

Tru-Test began in 1964 with milk flow meters and now a New Zealand-based world leader in agri-technology including milk metering equipment, electric fencing and livestock scales, dairy automation, milk cooling and farm holding tanks. It now reaches customers in 130 countries through a network of subsidiaries and partners. In August 2016 Tru-Test posted a loss after writing down the value of its Dairy Technology Services unit to reflect a downturn in the global dairy sector (see also our commentaries of September 2014 re earlier KTT shares in Tru-Test).

Thai Niche Hotel Expands In Auckland

Oaks Hotels and Resorts NZ Ltd (Thai Public 99.73%; various overseas 0.27%) has consent to acquire in one or more transactions within six years in the Metropolis Apartment Complex, 1 Courthouse Lane, Central Auckland from the Honourable Family Trust (Glory Family Trust and Chang Eun Oh, NZ100%). Price withheld. Oaks Hotels intends to introduce its Avani brand to New Zealand by upgrading the Metropolis Apartment Complex to a 4.5/5-star standard.

The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with “benefit to New Zealand” under s.17(2)(a)(i) creation of Jobs, s.17(2)(a)(iii) increased export receipts, s.17(2)(a)(iv) greater productivity or efficiency, s.17(2)(a)(v) additional investment for development purposes, and under Regulation 28(e) previous investments. Oaks Hotels has 50 plus hotels, mainly in Australia, but also NZ, Thailand, Dubai, Abu Dhabi and India. In NZ it has apartment-style accommodation at Metro Suites in Kitchener St, Auckland, and in Queenstown the Oaks Club Resort and Oaks Shores.

Jiggling Orchard Ownership

This purchase involves two Northland orchards and shifting ownership from a trust to companies involving the same two people. Stephen Diggle, VALIC NZ Ltd and Diggle Holdings Ltd (Stephen Charles Diggle, UK 50%; Karen Danielle Fraser, Australia 50%) has consent to acquire approx. 22ha at 139 Simons Road, Maungatapere, Whangarei (Whatitiri Orchard) from Hrothgar NZ Agri Holdings Ltd, approx. 159ha at Far North Road, SH1, Northland (Awanui Orchard) from VALIC NZ Ltd and 100% of the shares in Hrothgar NZ Agri Holdings Ltd (which directly owns Whatitiri Orchard). The vendors are Hrothgar NZ Trust (Stephen Charles Diggle, UK 50%, Karen Danielle Fraser, Australia 50%). Price $3,500,000.

The Applicant was granted consent to acquire the orchards in 2011 and 2015 and intends to reorganise the ownership structure under which it owns the orchards; no new land will be acquired and Stephen Diggle, Danielle Fraser and their family will continue to hold the major underlying beneficial interest in both orchards.

The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005.The “substantial and identifiable benefit to New Zealand” criteria were satisfied s. 17(2)(a)(i) jobs, 17(2)(a)(iii) increased export receipts, s. 17(2)(a)(iv) greater efficiency or productivity, s.17(2)(a)(v) additional investment for development purposes, and under Regulations 28(a) consequential benefits, 28(e) previous investments, 28(g) enhance the viability of other investment (see also our commentaries of April 2011, and January and February 2015 re Stephen Diggle).

Buying NZ Lifestyles

Gated Communities

Dominik Patrick Holy (Germany 100%) has consent to acquire approximately 415 hectares at Wiroa Station, Bay of Islands; and approx. 606 hectares of land at Paoneone Farm, Bay of Islands, from North Bay Holdings Limited (NZ 100%). Price was $6 million. Mr Holy intends to migrate to New Zealand and reside in New Zealand indefinitely, which satisfied s. 16(1)(e)(i) of the Overseas Investment Act 2005.

Wiroa Station is an upmarket “legacy property” with conservation values, developed by Williams Land Ltd along with other “gated communities” at Weira near Long Bay Auckland, Mataka Station in the Bay of Islands and Breamtail in Mangawhai. Paoneone Farm on the Purerua Peninsula is described by Luxury Real Estate NZ as “one of the few significant land parcels of its size in the world-renowned location, and can truly be called a ‘trophy property’’’. In 2011 Paoneone was reported to be owned by multimillionaire venture capitalist Bill Bernie. He was selling it by tender with the value of the farm including a long beach strip then estimated to be worth $20 million.

Philibert Jean Gaspard Laurent Frick (Switzerland 100%) has consent to acquire approx. 21 hectares at Lot 18, Mataka Station, Purerua Peninsula, Bay of Islands as a holiday retreat. Price $1,150,000. The vendor is Mataka 18 Ltd (Mataka Residents Association) (Kirin Ltd NZ 49%; Sedesh Ltd NZ 49%, James Speedy NZ 1%, Vimu Speedy NZ 1%).

The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, and “substantial and identifiable benefit to New Zealand” was satisfied by s.17(2)(b) mechanisms to protect or enhance significant habitats of indigenous fauna, s.28(a) consequential benefits, s.28(f) advance significant Government policy or strategy. The property is one of 30 lifestyle lots within the Mataka Development which was established on the Purerua Peninsula in 2002. he ownership of individual lots provides capital for the communal farming and conservation programmes which are an integral part of the development.

Motueka Is The Place To Bee

Vanakaville LLC (Donald Charles Fergusson, USA 100%) has consent to acquire 73 hectares of land at 3254 Motueka Valley Highway, Stanley Brook, Nelson from James and Jean Bint and Fletcher Vautier Moore Trustees Ltd as trustees of the J & J Family Trust (NZ 100%). Price was $685,000. Vanakaville intends to restore ten hectares of existing Manuka trees and to plant an additional 20 hectares of Manuka, intending to partner with Comvita which will supply beehives and engage an apiarist to harvest honey.

The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005. The “substantial and identifiable benefit to New Zealand” criteria were satisfied by s.17(2)(a)(iii) increased export receipts, s.17(2)(a)(v) additional investment for development purposes, s.17(2)(f) offer to sell riverbed to the Crown, and Regulation 28(a) consequential benefits. Vanaka (and Vanakaville) is a US indie rock band; ex-businessman Don Fergusson is founder, vocals, and bass. Manuka honey gets a mention in a song, “The Sweet Spot”.

Australians Brian and Kathryn Hooper received consent to buy approx. 0.6880 hectares at 170 and 174 Egmont St, Patea, Taranaki; price $400,000. They intend to migrate to NZ and live here indefinitely (s.16(1)(e)(i) of the Overseas Investment Act 2005.)

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