February 2008 decisionsCitigroup has approval to acquire Nikko Cordial Corporation for $723m Macquarie Bank’s Retirement Care (NZ) approved to acquire Qualcare CVC Asia Pacific funds to acquire 65% and up to 100% of Stella Group APEREF II may acquire remaining 40% of Great Northern Developments NZ Poultry Enterprises approved to buy NZ Poultry Holdings (Tegel) Borders gets approval to acquire 40% of A&R Whitcoulls Group JAM world acquires further 10% of Marlborough vineyard joint venture
Citigroup has approval to acquire Nikko Cordial Corporation for $723mCitigroup Inc. of the U.S.A. has approval to acquire Nikko Cordial Corporation for $723,096,000. Nikko Cordial is owned 77.26% in Japan by, 9.46% in the U.K., 5.1% in the U.S.A., 4.9% by Citigroup Inc., and 3.28% by “various overseas persons”.
Nikko Cordial doesn’t make drinks: it is a financial corporation which owns Hirequip Group and the Fleet Partners Group in Aotearoa. See our commentary for October and December 2006 for further details of Nikko’s acquisition of the two companies.
According to the OIO,
Citigroup Japan Holdings Limited (Citigroup Japan), a wholly-owned subsidiary of Citigroup Inc (Citigroup), currently owns 68.11% of the shares in Nikko Cordial Corporation (Nikko). Nikko is a diversified financial services holding company whose subsidiaries are principally engaged in retail and wholesale securities brokerage, investment banking, asset management and merchant banking activities primarily in Japan.
As a result of this acquisition Citigroup has acquired an indirect interest in a group of New Zealand companies including the Hirequip Group and the Fleet Partners Group.
On 31 October 2007, Citigroup Japan and Nikko entered into a definitive share exchange agreement whereby all of the shareholders in Nikko, other that Citigroup Japan, will exchange their Nikko shares for shares in Citigroup, and Nikko will be de-listed.
Citigroup and Nikko have built a strong co-operative relationship over a period of time including Nikko Citigroup Limited, a joint venture investment bank incorporated in February 1999, and NikkoCiti Trust and Banking Corporation, a joint venture trust bank jointly operated since 2001. Citigroup became a shareholder in Nikko in 1998 and considers the strategic relationship as a key part of its business in Japan.
Citigroup and Nikko formed the alliance to create one of Japan’s leading financial services groups and to enable the combined group to pursue new growth opportunities.
[Decision number 200810012.] Macquarie Bank’s Retirement Care (NZ) approved to acquire QualcareRetirement Care (NZ) Limited, owned 74.41% in Australia, 24.42% in Switzerland, and 1.17% in Aotearoa, has approval to acquire Qualcare Group Holdings Limited for a suppressed amount. However, we are able to calculate the price from the OIO’s statistics: $267,054,250.
The purchase includes 4.4 hectares comprising: · 0.6 hectares at 400 Cornwall Road, Mahora, Hastings, Hawkes Bay; · 1.1 hectares situated at 76 Banks Avenue, Woodchester, Christchurch, Canterbury; and · 2.6 hectares at Totara Park Village, 9 Melwood Drive, Warkworth, North Auckland.
Qualcare was owned 36.56% in Australia, 27.12% in Belgium, 2.74% by “various overseas persons”, 31.96% in Aotearoa by Hermitage Holdings Limited as trustee for the Hermitage Trust, and 1.62% in Aotearoa by Earl Gasparich, Celia Gasparich, and Carla Pearce as trustees of the Gasparich Family Trust.
Retirement Care is in fact owned by three funds run by Macquarie Bank. Qualcare was owned approximately 60% by private equity investor, Ironbridge Capital and 30% by Qualcare founder Greg Tomlinson (through Hermitage Holdings). Earl Gasparich is Finance Director of Qualcare.
According to Ironbridge’s web site, Qualcare is “one of the largest aged care operators in New Zealand, with 976 rest home and hospital beds, and 462 independent living villas and apartments. Ironbridge has invested A$36 million of equity for 60% of the business.” (http://www.ironbridge.com.au/qualcare.htm, accessed 12/7/08). See our commentaries for December 2005 and May 2006 for further details.
According to the OIO,
The three funds (the Funds) comprising the Applicant include Macquarie Global Infrastructure Fund II (GIF II), Macquarie Global Infrastructure Fund III (GIF III) and LODH Macquarie Infrastructure Fund III (LMIF). The Funds together with Retirement Care New Zealand (RCNZ) are collectively known as the Applicant. GIF II, GIF III, and LMIF have a common investment strategy as they take a long-term view of investment opportunities.
RCNZ or its subsidiaries have acquired ten separate interests, relating to aged care, in New Zealand in the period since July 2005. RCNZ is expanding in New Zealand with a view to developing a world-class aged care business.
Various subsidiaries of Qualcare Group Holdings Limited (Qualcare), operate 22 facilities, 16 of which provide both residential care and retirement village units. The Applicant intends to continue to operate the business of the Qualcare Group in substantially the same way it is currently operated and is supportive of the current plans for growth and productivity improvements.
The Applicant is proposing to build new facilities and/or refurbish existing facilities within the Qualcare Group. The Applicant also intends to refurbish the existing facilities owned and operated by companies in the RCNZ group.
The transaction involves an on-going commitment by certain Macquarie Group Limited (MGL) managed funds to the aged care sector. Several significant transactions have recently been completed in this sector in New Zealand, Canada and Australia, by funds managed by subsidiaries of MGL.
Qualcare’s business will require significant capital expenditure in the future. Qualcare, under its current ownership, is constrained in its ability to fund these ongoing capital requirements. RCNZ with their existing investments in the retirement village and aged care sectors, and access to significant capital resources, consider they are well placed to manage and implement this next phase of investment in the business.
[Decision number 200810015.] CVC Asia Pacific funds to acquire 65% and up to 100% of Stella Group“Funds advised by CVC Asia Pacific Limited”, owned 55.9% in the U.S.A., 9.72% in the U.K., 8.82% in Singapore, 7.97% by “various overseas persons”, 7.03% in United Arab Emirates, 5.79% in the Netherlands, and 4.77% in Switzerland, have approval to
CVC’s Funds will be paying “approximately $133,000,000 for the interest to be acquired which relates to New Zealand assets”, and will be acquiring the group from MFS Stella Holdings Pty Limited, owned in Australia.
The acquisition includes 3.9 hectares comprising: · 0.5 hectares at Unit 11, 239 Frankton Road, Queenstown, Otago; and · 3.4 hectares at Blue Water Resort Property, Tekapo-Twizel Road, Lake Tekapo, Canterbury.
The OIO states:
Stella Group is a hospitality and travel group with operations in Australia, New Zealand, South Africa and the United Kingdom. The Stella Group’s hospitality businesses in Australasia are operated under the Breakfree, Mantra, Peppers and Saville brands and the Protea Hotels and African Pride brands in Africa. Stella Travel Services operates under the Harvey World Travel, Travelscene American Express, Holiday Shoppe, United Travel, Travel Bag and Global brand names.
MFS Limited (MFS), an Australian Stock Exchange listed company, owns Stella Group through a wholly-owned subsidiary, MFS Stella Holdings Pty Limited (MFS Stella Holdings). MFS is looking to sell a majority interest in Stella Group to funds advised by CVC Asia Pacific Limited (CVC Asia Pacific) through special purpose vehicles established for the acquisition.
To effect the transaction, Newco, a special purpose vehicle will be incorporated to acquire Stella Group from MFS. It is proposed that the shareholders in Newco will be funds advised by CVC Asia Pacific (up to an initial maximum of 65%) and MFS Stella Holdings (up to an initial maximum of 35%). The effect of the proposed transaction is that MFS sells down its stake in Stella Group and funds advised by CVC Asia Pacific acquire up to 65% of Stella Group.
Funds advised by CVC Asia Pacific also seek consent to acquire up to 100% of the shares in Newco to provide for any further adjustments in the shareholding including any equity injections that may be made to facilitate the development plan of Newco.
CVC Asia Pacific carries out the business of advising on investments in companies that demonstrate potential to grow and deliver increased value to the CVC Asia Pacific fund investors over the medium term. CVC Asia Pacific believes that the investment in the Stella Group represents an opportunity to acquire profitable, market leading businesses with significant prospects for growth and value creation.
The Stella Group was an amalgamation of travel operations amassed by the ill-fated MFS group: see for example “S8 of Australia buys Gullivers Travel Group, New Zealand’s largest travel agent”, in our commentary on the OIO’s July 2006 decisions. At the time of this approval, MFS was in dire financial trouble, and although it had put Stella on the market in mid 2007, was now selling assets in a desperate attempt to survive.
[Decision number 200810016.] APEREF II may acquire remaining 40% of Great Northern DevelopmentsAPEREF II Limited, owned 27.0816% in Australia and 71.7984% in Aotearoa by minority shareholders, and 1.12% in Aotearoa by John O’Sullivan, has approval to acquire the remaining 40% of shares of Great Northern Developments Limited, Auckland for $12,244,000 from AMP Capital Investors (New Zealand) Limited as manager for the AMP New Zealand Property Fund, owned 61.3102% in Aotearoa, 30.7398% in Australia, and 7.95% by “various overseas persons”. Both APEREF II and Great Northern are AMP subsidiaries.
The OIO states:
The Applicant holds 60% of the shares in Great Northern Developments Limited. Great Northern Developments Limited is a special purpose vehicle for funds managed by AMP Capital Investors (New Zealand) Limited, incorporated for the purpose of acquiring and developing the Lion Brewery site at Khyber Pass Road, Newmarket, Auckland.
The Applicant proposes to acquire the balance (40%) of the issued share capital of Great Northern Developments Limited from AMP NZ Property Fund.
AMP NZ Property Fund has decided that its 40% shareholding in Great Northern Developments Limited does not fit the overall asset allocation profile of its investments at this time and has decided to sell its shares to the Applicant. The Applicant needs fellow shareholders that have the balance sheet and expertise to assist with and profit from such a major development. The Applicant wishes to purchase AMP NZ Property Fund’s shares in Great Northern Developments Limited to avoid the loss of control to another party. Great Northern Developments Limited is a perfect fit into the Applicant’s portfolio as the Applicant is purely a developer of property.
See our commentary for September 2007 for further details of the acquisition of the Lion Nathan property. APEREF received OIO approval for acquisition of other properties in July and December 2007. In December 2007, APEREF II was owned 29.7752% in Australia, 68.9748% in Aotearoa by minor shareholders, and 1.25% in Aotearoa by John O’Sullivan.
[Decision number 200810013.]
NZ Poultry Enterprises approved to buy NZ Poultry Holdings (Tegel)NZ Poultry Enterprises Limited, owned 38.36% in Australia, 31.108% in the U.S.A., 7.012% in the U.K., 3.52% by “various overseas persons”, and 20% in Aotearoa, has approval to acquire the shares of NZ Poultry Holdings Limited for a suppressed amount. NZ Poultry Holdings owns the major chicken meat supplier, Tegel.
Though the price is suppressed, we are able to calculate it from the statistics supplied by the OIO: $563,029,750.
According to the OIO, NZ Poultry Holdings Limited was owned 59.8122% in the U.S.A., 16.074% in Australia, 14.3458% in the U.K., 6.768% by “various overseas persons”, and 3% in Aotearoa, so the overseas ownership has been reduced by this takeover. However in fact it was owned by the private equity investment company, Pacific Equity Partners (PEP) which received approval to buy it from Wattie’s Investments, a subsidiary of H.J. Heinz Company of the U.S.A. in March 2006. See our commentary for that month for further details.
The new owners have substantial PEP shareholding too. The transaction has the effect of reducing PEP’s and another significant shareholder’s shareholding in Tegel: according to the OIO,
In effect PEP and Intermediate Capital Group (ICG), are selling down their respective stakes – PEP from 84.6% to 44% and ICG from 12.4% to 6% and Tegel Management increasing their shareholding by 10%. The new investors, ANZ Bank managed funds and Lujeta are acquiring a 37% interest.
The acquisition includes: 107 hectares of freehold comprising: · 3.5 hectares at 250-260-270 Flanagan Road and 89-95 Tegal Road, Papakura, Auckland; · 90 hectares at 26 Wortley Road, Lepperton, New Plymouth, 58 - 78 Brown Road, Waitara, 585 Manutahi Road, Waitara, 55 Hickman Road, Onaero,Taranaki; and · 14 hectares at 313-315 Hautere Cross Road, Otaki;
and 48 hectares of leasehold comprising: · 2 hectares situated at 168 Avenue Road, New Plymouth, Taranaki; and
The OIO states:
NZ Poultry Holdings Limited (NZPHL) received consent to acquire 100% of Tegel Foods Limited (Tegel) on 29 March 2006. Tegel is a fully integrated poultry producer involved in the breeding, hatching, feeding, growing, processing, and marketing of chicken and turkey in New Zealand. Tegel’s products include fresh, frozen and cooked whole chickens, chicken portions, and other value added products.
Tegel’s operations include three major processing facilities, a smaller value-add processing plant, and breeding and hatching facilities. Tegel also owns and operates feedmills in New Zealand. The feedmills produce feed used internally at Tegel and sold through Tegel’s animal feed and animal health division, NRM. NRM is New Zealand’s leading supplier of animal feed and animal health products. It provides feed to retail merchants and industrial customers.
NZPEL, the shareholders of which are Pacific Equity Partners (PEP) – 44%; Intermediate Capital Group plc (ICG) – 6%; ANZ Bank managed funds – 27%; Tegel Management – 13% and Lujeta – 10%, proposes to acquire (through a wholly-owned subsidiary NZ Poultry Finance Limited) up to 100% of the shares in NZPHL. NZPEL will then indirectly own 100% of the shares in Tegel.
In effect PEP and ICG, are selling down their respective stakes – PEP from 84.6% to 44% and ICG from 12.4% to 6% and Tegel Management increasing their shareholding by 10%. The new investors, ANZ Bank managed funds and Lujeta are acquiring a 37% interest.
NZPEL’s intended strategy for Tegel is to operate Tegel’s business substantially as it has been operated to date and to continue to support management plans for growth and productivity improvements. The individuals associated with the proposed owners of NZPEL are highly experienced directors and will continue to provide high level strategic advice to Tegel.
The proposed overseas investment is or is likely to benefit New Zealand (or any part of it or group of New Zealanders) having regard to the following factors: Overseas Investment Act 2005: (i) s17(2)(b) - Indigenous vegetation/fauna; (ii) s17(2)(c) - Trout, salmon, wildlife and game; (iii) s17(2)(d) - Historic Heritage; (iv) s17(2)(e) -Walking access; (v) s17(2)(f) - Offer to sell seabed/foreshore to the Crown. Overseas Investment Regulations 2005 (i) r28(b) - Key person in a key industry; (ii) r28(c) - Adversely affect image, trade, or international relations; and (iii) r28(e) - Previous investments.
[Decision number 200810014.] Borders gets approval to acquire 40% of A&R Whitcoulls GroupBorders Group Inc, of the U.S.A., received approval to acquire up to 40% of the shares in A&R Whitcoulls Group Holdings Pty Limited for $130,000,000 from existing shareholders. According to the OIO, A&R Whitcoulls is owned 77.0814% in the U.S.A. and 22.9186% in Australia. In fact it is owned by private equity corporation, Pacific Equity Partners (PEP).
Although the OIO approval is for Borders to take over Whitcoulls, it was actually the reverse: Borders wanted to get out of Australia and Aotearoa, and PEP, through Whitcoulls, was the buyer. Presumably PEP had tax or other reasons for the complex structuring of the purchase as described.
In fact this 40% bid did not succeed. A later bid for 100% did however. Borders set up in New Zealand in 1999, at a time when they had been under siege for four or five years in the U.S. for their rabid anti-union policies. See our commentary for September 1999 for further details.
In this case, according to the OIO,
The Borders Group, Inc and certain of its subsidiaries (together the Borders Group) intend to enter into an agreement to sell all of the issued shares in Borders Australia Pty Limited and Borders New Zealand Limited (Borders New Zealand) to Spine Newco Pty Limited and Spine Newco (NZ) Limited (Spine Newco). Borders New Zealand operates four bookstores in New Zealand.
As part of the consideration for the proposed transaction, Borders Group and Borders Pty Limited (Borders Singapore) will be issued a convertible note by A&R Whitcoulls Group Holdings Pty Limited (ARW) which will convert after approximately 60 days into 40% of the issued capital, on a fully diluted basis, in ARW. At the time of conversion, Spine Newco will have become wholly-owned subsidiaries of ARW. ARW operates Whitcoulls and Angus & Robertson bookstores, Calendar Club speciality calendar stores and the Supanews news agencies in Australia.
The proposed transaction will not result in a divestment by ARW of its existing business but rather a merger of the existing Borders and ARW’s businesses.
The rationale for the proposed transaction is to increase ARW’s operational and infrastructural synergies particularly those relating to the use of information technology services and delivery systems, enabling the merged firm to better compete with established chain stores, and discount and department stores in the supply of books and other leisure, entertainment and stationery products to consumers.
[Decision number 200810011.] JAM world acquires further 10% of Marlborough vineyard joint venture
The OIO states:
The Applicant previously obtained consent in 2003 to purchase a 40% joint venture interest in the relevant land. The land has been developed into a vineyard with 9.5 hectares planted in Marlborough Sauvignon Blanc.
JAM intends to acquire a further 10% share of the property, in which it already owns a 40% share.
The reasons for selling are to equalise the shares in the vineyard joint venture. On initial acquisition in 2003 a third New Zealand partner, Mountain View Investments Limited, was involved and held a 1/5 share. However this party has since sold out to the vendor, as between the vendor and the Applicant, it is intended to continue the joint venture on a 50/50 basis.
The Applicant views the investment as a means of further enhancing the viability of the initial investment, and as beneficial to the company by equalising the joint venture’s interest with the two remaining participants.
The previous decision was in September 2003 (see our commentary for that month for further details), though this makes no mention of Mountain View Investments Ltd.
[Decision number 200810017.] Summary statisticsAll investments The net value of investment approved in the year to February 2008 is considerably lower than for the previous February year (i.e. disregarding sales from one overseas investor to another, and discounting part New Zealand ownership of the assets). However the gross value is similar to 2007. Unusually, net investment in February is negative, indicating that one sale increased the New Zealand share of the ownership (though still leaving more than 25% overseas ownership).
Investment involving land Gross and net sales of land approved by the OIO during the years to February have fallen in area, though number of sales has risen. There are still no refusals this year (above), compared to two by the same time in 2007.
Fishing Quota As usual, there was no fishing quota approved for sale this month.
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Compiled by: Campaign Against Foreign Control of Aotearoa, P. O. Box 2258 Christchurch. |
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