October 2005 decisionsWoolworths Australia buys Progressive Enterprises supermarket chain Macquarie Bank buys more retirement facilities by acquiring Metlifecare AMP company buys out other shareholders in Capital Properties Australians acquire Auckland site for hotel, retail, residential development Retrospective consent to Holcim (Milburn) for acquiring Avondale land Residential development at Feilding by Chinese investor
Woolworths Australia buys Progressive Enterprises supermarket chainWoolworths Limited of Australia has approval to acquire Progressive Enterprises Holdings Limited for $2,775,310,832 from Foodland (NZ) Holdings Limited which is owned 100% by Foodland Associated Limited of Australia.
The acquisition gives Woolworths Australia the second largest supermarket chain in Aotearoa (next to Foodstuffs). Progressive has a 44% share of the market, compared to 56% for Foodstuffs, though it is also relevant that Woolworths Australia has a $32 billion annual turnover compared to $6 billion for Foodstuffs.
Almost as soon as the deal was done, Woolworths Australia was being accused of “hardball tactics” against its suppliers in Aotearoa. According to the New Zealand Herald,
Suppliers say Woolworths Australia has threatened to ban their products or downgrade their position on shelves unless it gets discounts of 10 to 15%. Suppliers, who spoke on condition of anonymity, say the usual terms are around 5%. Rather than risk losing 43% of the grocery market, suppliers say they accepted the demand. But many warned their margins were so tight they would have to put up prices to cover Woolworths’ demands.
“They’re treating New Zealand like a state of Australia,” said one small food company.
Woolworths was demanding standard product prices from both New Zealand and Australian suppliers, whatever the brand. The company said it would have to put its prices up in response, and might have to shed jobs.
But several big suppliers told the Weekend Herald that Woolworths’ pressure tactics included not accepting price increases from suppliers.
The Food and Grocery Council said Woolworths was treating New Zealand and Australia as one market, wanting one net price and one set of trading terms common to each grocery category.
Commercial director Lindsay Davidson confirmed supplier claims that while Foodstuffs and Progressive in the past had used rebates and discounts to lower consumer prices, Woolworths’ practice was to put some into its pockets. (New Zealand Herald, “Foodstuffs meeting new rival head on”, by Wendy Pugh, 11/4/06; and “Grocery hard line threatens food bills”, by Andrea Fox, 3/6/06.)
Progressive states on its web site (http://www.progressive.co.nz/about_us/index.asp) that it operates the Foodtown, Woolworths and Countdown supermarket groups, and is also franchise co-ordinator for the FreshChoice and SuperValue groups. It has a wholesaling subsidiary, The Supply Chain. It also has “several meat processing plants, warehouse operations and support offices”. It has approximately 150 stores (at 6 June 2006):
Woolworths Australia is headquartered in Sydney and has “more than 1600 stores in Australia and has over 140,000 employees making it the second largest employer in Australia.” It has other interests in New Zealand: 33 Dick Smith Electronics stores. In Australia it also operates Safeway, Food For Less, Dick Smith Electronics and PowerHouse, Tandy, Woolworths Liquor, BWS, First Estate, Dan Murphy’s, Plus Petrol, BIG W, Woolworths Ezy Banking, Woolworths HomeShop and GreenGrocer chains.
Its competitor, Foodstuffs consists of “three separate, regionally based, retailer-owned co-operative companies and a Federation body, Foodstuffs (NZ) Ltd”, according to its website (http://www.foodstuffs.co.nz/OurCompany/WhoWeAre). The three regional co-operatives cover the North Island from Turangi and Taumarunui north; the southern half of the North Island; and the entire South Island, respectively. Each regional company “operates entirely autonomously with its own Board and management”.
Each regional cooperative operates a cash and carry wholesale outlet, respectively James Gilmour & Co Ltd; Toops Wholesale Ltd; and Trents Wholesale Ltd. Their retail chains are New World, Pak’n Save, Write Price, Four Square/Four Square Discount, and On the Spot (South Island only). It has over 630 stores (at 6 June 2006):
According to the OIO,
Woolworths Limited (Woolworths) has entered into an agreement with Foodland Associates Limited (FAL) and Metcash Trading Limited (Metcash), in relation to the proposed “demerger” of the FAL group of companies. The “demerger” transactions involve Metcash acquiring the Australian supermarket, franchising, and wholesale businesses of FAL (other than 20 Australian Action Stores and 2 Action Store development sites), and Woolworths acquiring the New Zealand supermarket, franchising, and wholesale businesses of FAL (together with the 20 Australian Action Stores and 2 Action Store development sites). The New Zealand businesses include the Woolworths, Countdown, and Foodtown supermarkets which will provide Woolworths an opportunity to expand its core business outside of Australia.
The sale includes 99 hectares of leasehold comprising: · 21 hectares at 16-24 Anzac Road, Browns Bay; 271 Richmond Road, Grey Lynn; 80-120 Favona Road, Mangere; 311 Penrose Road, Penrose; 2-16 Barrys Point Road, Takapuna; corner Edmonton and Te Atatu South Roads, Te Atatu; and 528536 Mt Albert Road, Three Kings, Auckland; · 77 hectares at 91 Hilton Street, Kaiapoi; Two Chain Road, Malvern; and 9 Browne Street, Timaru, Canterbury; and · 1.8 hectares at Corner Pah and High Streets, Motueka; and 1-17 Halifax Street, Nelson. [Decision number 200520073.] Macquarie Bank buys more retirement facilities by acquiring MetlifecareRetirement Villages New Zealand Limited, owned 50% by Macquarie Bank Limited of Australia and 50% by FKP Limited of Australia, has approval to acquire Metlifecare Limited for $340,700,000 “based on 100% acceptance of the takeover offer” from its existing shareholders: 34.59% The Todd Corporation Limited, 24.86% Brian Paul Keene, Susanna Catherine Cook and Clifford James Cook, and 40.52% in minority shareholdings, all of Aotearoa, and 0.03% “Various overseas persons”.
The acquisition includes 36 hectares comprising: · 1.9 hectares at 12-20 Edgewater Drive, Pakuranga, Auckland; · 10 hectares at 48-72 Avonleigh Road, Green Bay, Auckland; · 8.5 hectares at 44-60 Maranui Street, Mt Maunganui, Tauranga, Bay of Plenty; · 2.7 hectares at 33 Gloucester Road, Mt Maunganui, Tauranga, Bay of Plenty; · 8.0 hectares at Spencer Russell Drive, Paraparaumu, Wellington; and · 4.7 hectares at 357-369 Lower Queen Street, Richmond, Nelson.
Last month (September 2005) Macquarie received approval to acquire 11 Salvation Army homes. See our commentary for that month, July and August 2005 for further details of Macquarie’s aggressive aged care acquisition campaign.
According to the OIO,
The Applicant proposes to acquire 25% of the issued shares in Metlifecare Limited (Metlifecare) from Private Health Care (NZ) Limited (PHC). To acquire PHC’s stake in Metlifecare would trigger the need to bid for 100% of Metlifecare pursuant to the Takeovers Code.
Metlifecare owns and is the operator of 13 retirement villages throughout New Zealand, incorporating nine nursing homes and six hospitals, providing care to over 2,000 residents. Metlifecare is listed on the New Zealand Stock Exchange.
The proposed acquisition is part of the current focus of FKP Limited (FKP) and certain Macquarie Bank Limited (Macquarie) managed funds in the aged care sector. Both FKP and the Macquarie Group have recently completed acquisitions in this sector. [Decision number 200520072.] AMP company buys out other shareholders in Capital PropertiesAMP Capital Investors (New Zealand) Limited, as manager for the AMP NZ Property Fund, owned 52.01% by shareholders in Australia and 47.99% by shareholders in Aotearoa, has approval to acquire Capital Properties New Zealand Limited for $289,737,080 from existing shareholders in Capital Properties New Zealand Limited other than AMP NZ Property Fund, 94.6714% of whom are from Aotearoa, 4.6286% from Australia, and 0.7% from elsewhere.
According to the OIO,
AMP NZ Property Fund (APF), a wholesale property fund managed by AMP Capital Investors (New Zealand) Limited proposes to acquire up to 100% of the shares in Capital Properties New Zealand Limited, a company listed on the New Zealand Stock Exchange, by way of a takeover offer pursuant to the Takeovers Code. APF’s investment philosophy is to focus on medium to long-term investment returns, and on occasion, to offset short-term performance to achieve those medium to long-term returns. APF focuses on investment grade assets that provide good potential for tenant retention, income and capital appreciation. The proposed acquisition is likely to diversify APF’s geographical spread of properties.
Capital Properties was set up in 1998 to buy nine office buildings mainly in Thorndon, Wellington, purchased from the Government’s property arm, Government Property Services Limited. It has since diversified somewhat (including taking over Shortland Properties Limited in 1999), but 48% of its property holdings are still government buildings. The government buildings it owns contain some of the most important government departments:
· Bowen House Office (housing the Parliamentary Services Commission) · Bowen State Building Office (Ministry of Social Development, Department of Child, Youth and Family Services) · Charles Fergusson Tower and Annex Office (Ministry of Justice, Ministry of Social Development, Department of Child, Youth and Family Services) · Defence House Office (Defence Force, Security Intelligence Service) · Freyberg Building Office (Defence Force, Inland Revenue, Government Communication Security Bureau) · St Paul’s Square Office (Ministry of Education, Audit New Zealand, Government Communication Security Bureau) · State Services Commission Building Office (State Services Commission, National Library of New Zealand) · Vogel Building Office (Ministry of Justice, Crown Forestry Rental Trust, Ministry of Education) · William Clayton Building Office (Ministry of Health) (Source: http://www.cpnz.co.nz/Pages/history.htm, http://www.cpnz.co.nz/Pages/aboutUs.htm and http://www.cpnz.co.nz/Pages/PropertyPortfolio.htm, accessed 6 June 2006.) [Decision number 200520069.] Australians acquire Auckland site for hotel, retail, residential developmentNelson Quarter Depot Site Limited, owned 50% by Duncan Bull and 50% by Douglas Rikard-Bell, both of Australia, has approval to acquire 0.027 hectares at 105 Nelson Street, Auckland for $2,250,000 from Tutanekai Property Holdings Limited of Aotearoa.
Bull and Rikard-Bell, through their company, 1st Class Baggage Ltd, had in July 2004 acquired an adjoining 2.9 hectares of leasehold at 61-87 Cook Street, Auckland for $30,000,000. See our commentary for that month for further details.
According to the OIO,
The subject property which comprises a three-level commercial building rented to various tenants, adjoins 2.8822 hectares of land over which the Applicant has acquired a leasehold interest. The Applicant proposes to undertake a development over a five to six year timeframe creating a fully integrated mixed use 28,000 square metre urban development comprising approximately 4,000 square metres of retail space, 5,000 square metres of commercial space, a boutique hotel, approximately 1,000 residential apartments and 2,000 car parks. It is proposed that the land will be developed as an artistic and cultural precinct including open communal gathering space. The subject land will be incorporated into the Applicant’s development. The Applicant advises that the Auckland City Council has encouraged it to purchase the subject property so as to achieve better street alignment for the overall development that it is proposing to undertake. [Decision number 200520070.] Retrospective consent to Holcim (Milburn) for acquiring Avondale landHolcim (New Zealand) Limited, owned 66.38% in minority shareholdings in Switzerland, 23.6% by Thomas Schmidheiny of Switzerland and 10.02% by the Capital Group Companies of the U.S.A., has approval to acquire two pieces of land at 70 Patiki Road, Avondale, Auckland from Antares Holdings Limited owned 60% by Geoffrey Roy Harnett of Aotearoa and 40% by Lanie Jean Read of Aotearoa:
· 0.4742 hectares of freehold land for $1,110,000 plus GST (if any) [Decision number 200520076]; and · 0.1706 hectares of leasehold for $81,000 [Decision number 200520075].
The first piece of land is apparently being acquired as a result of exercising a right to purchase land which was previously leased from the vendor. The application to purchase it revealed that approval had never been requested for the acquisition of the second block of (leasehold) land, which was acquired in 1998. The land adjoins Holcim’s plant, which is on land which adjoins the foreshore.
The original 1998 approval where Holcim acquired the land, mentioned by the OIO, was made by its predecessor, the Overseas Investment Commission in October 1998. Zealhoff, a subsidiary of Holderbank Financiere Glaris Ltd, of Switzerland, received approval to acquire the 27% of Milburn New Zealand Ltd it didn’t already own. See our commentary for that month for further details.
The OIO states:
The Applicant, through its operating divisions and subsidiaries, is involved in the manufacture, distribution and sale of cement and ready mixed concrete, and the extraction, processing and sale of aggregate and limestone. It has operated in New Zealand for over 115 years and has established positions within these markets. The Applicant previously operated in New Zealand as Milburn New Zealand Limited.
Regarding the first piece of the land, the OIO states:
The Applicant’s parent company, Holcim Limited, is one of the world’s leading suppliers of cement, aggregates and concrete. The Applicant is proposing to acquire the subject property which is situated in a well-developed industrial area. The land adjoins a 6020 sq.m. parcel of land owned by the Applicant, from which it operates a ready mix concrete plant. The existing land owned by the Applicant was part of the land the subject of [application/decision] A199820094/D199820095, when Zealhoff New Zealand Limited acquired the balance shareholding in the Applicant (then named Milburn New Zealand Limited).
Part of the land is leased to MT Containers for the manufacture of plastic containers. The MT Containers lease is terminable on six months notice by either the lessee or lessor.
With respect to the second piece of land, we are told:
On 21 August 2001 the Applicant entered into a deed of lease of part (1706m2) of the land at 70 Patiki Road, Avondale, Auckland with Antares Holdings Limited. The land is utilised for concrete truck parking. The balance of the land is leased by Antares Holdings Limited to MT Containers for the manufacture of plastic containers. The leased land adjoins a 6020m2 parcel of land owned by the Applicant, from which it operates a ready mix concrete plant. The existing land owned by the Applicant was part of the land the subject of A199820094/D199820095, when Zealhoff New Zealand Limited acquired the balance shareholding in the Applicant (then named Milburn New Zealand Limited) in 1998. The 6020m2 parcel of land is sensitive, being land that exceeds 0.2 hectares, and adjoins the foreshore (the Whau River).
The land leased by the Applicant is “associated land”. The Applicant did not obtain consent to the entry into this lease as the issue of whether the leased land was associated with the existing land holding of the Applicant was not considered when the lease was entered into and was an inadvertent oversight by the Applicant and its solicitors. It was not until the Applicant exercised a first right of refusal under the lease to acquire the freehold, that this issue was identified. The Applicant has filed an application to acquire the freehold interest in the land.
The proposal resulted in an avenue for future greater productivity and efficiencies to the Applicant’s existing ready mix concrete plant. The subsequent decision by the Applicant to exercise its first right of refusal under the lease to acquire the freehold of the property is likely to enhance these benefits. Residential development at Feilding by Chinese investorBest Choice Trustee Limited as trustee of the Best Choice Development Trust, owned by Yong Yang of China, has approval to acquire 10 hectares at 116 Pharazyn Street, Feilding, Manawatu for $1,080,000 from Douglas James Knight, Winston Howard Knight, and Isla Joy Knight as trustees of the Brian Knight Family Trust of Aotearoa.
According to the OIO,
The Applicant proposes to acquire the subject land to carry out a residential subdivision development. The nature, extent, and timing of the development is dependent on whether the land is rezoned from Rural to Residential land by the Manawatu District Council (the Council). The Council is currently considering rezoning options around Feilding, and is looking to rezone enough land to provide 400-500 new residential sections. The Council has identified six urban growth options including a block of land that partly comprises the subject land.
The Applicant advises that there are two development options: firstly to subdivide the land into approximately 24 allotments with a minimum area of 4,000 square metres (option A). This is a discretionary activity under the Manawatu District Plan; and secondly, if the land is rezoned Residential to subdivide the land into approximately 132 allotments with a minimum area of 500 square metres (Option B). This will also be a discretionary activity under the Manawatu District Plan upon such rezoning taking place. [Decision number 200520071.] Land for wine· Ohsawa Kogyo Co. Limited, owned by Taizo Ozawa (57.33%) Tsutomu Ozawa (13.33%), Kazuo Ozawa (10%), Eriko Ozawa (7.5%), Taeko Ozawa (5.33%), Kaori Ozawa (2.17%), Megumi Ozawa (2.17%), Naomi Ozawa (2.17%), all of Japan, has approval to acquire 43 hectares at 424 Kereru Road, Hastings, Hawkes Bay for $1,631,250 from Craggy Range Vineyards Limited owned 95% by Terrence Elmore Peabody of Australia, and 5% by Stephen Mark Smith and Laura Bridget Cunningham Smith of Aotearoa. According to the OIO, “the Applicant proposes to acquire the subject land to develop a vineyard, winery, and restaurant facility. The land is currently leased by the vendor to local farmers for stock grazing. The Applicant’s business plan is based on the production and export to Japan, and other Asian markets, of premium varietal wines.” [Decision number 200520074.] Summary statisticsAll investments The value of investment approved in the year to October 2005 is considerably higher than for the previous October year, but the net value (i.e. disregarding sales from one overseas investor to another, and discounting part New Zealand ownership of the assets) is considerably lower. By far the greatest part of the value of the approvals is for sale from one overseas investor to another.
*In addition there was one retrospective approval granted during the month. This involved a gross consideration of $81,000 and a net investment of $81,000, a gross land area of 0.2 hectares and a net land area of 0.2 hectares.
Investment involving land Gross sales of land approved by the OIO during the years to October have fallen in area, though net sales are have risen from a negative figure to over 47,000 hectares. Refusals (above) have fallen considerably in number and area, but are still a tiny proportion of the total.
*In addition there was one retrospective approval granted during the month. This involved a gross consideration of $81,000 and a net investment of $81,000, a gross land area of 0.2 hectares and a net land area of 0.2 hectares.
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Compiled by: Campaign Against Foreign Control of Aotearoa, P. O. Box 2258 Christchurch. |
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