iiNet New Zealand Limited, owned 45.1% by Michael Malone of Australia, and 54.9% by minority shareholders in Australia, has approval to acquire the ihug group of companies for $57,152,188 from its New Zealand shareholders. According to the OIC,
The Applicant proposes to acquire all of the shares in the ihug Group of companies, as part of a wider Australasian transaction, including iHug Limited and The IP Factory Limited. The iHug Group is New Zealand’s third largest internet services provider providing services such as dialup and ADSL services, telephony services, wholesale broadband and web services in New Zealand and Australia. The proposed transaction is likely to combine two large internet companies and provide scope for future growth.
Ihug, formed nine years ago by brothers Nick and Tim Wood, is the third largest Internet Service Provider (ISP) in Aotearoa behind overseas owned giants Telecom (Xtra) and TelstraClear (Paradise, Clearnet), making it, until this takeover, the largest locally owned ISP. Together, the three have 80-90% of the country’s 800,000 internet users according to telecommunications analyst Paul Budde (“New Zealand - ISP Market - Major Players”, 8/10/03, http://www.budde.com.au/TOC/TOC2620.html).
Ihug’s owners had made at least two other attempts to sell. In May 1999 Sky Network Television announced it would take a 30% interest in it, with an option to buy a further 15%, but the deal fell over due to disagreements over future directions, including reportedly the pay packets for the Woods – the Wood brothers wanted $500,000 each with 10 weeks’ leave. Another merger proposed with Force corporation collapsed in 2000. Ihug then purchased 51% of video chain Video Ezy but sold its shareholding back to the original owners a year later (Press, “Sky TV stake does not stop Ihug from listing”, by Neil Birss, 6/5/99, p.29; Computerworld New Zealand, “Ihug heading for Aussie ownership”, by Paul Brislen, 20/8/03).
Ihug’s strength has been as an innovator. It introduced fixed cost ISP services, internet telephony, and high speed satellite links to the market in Aotearoa. On the other hand, Perth-based iiNet has grown largely by a rapid series of takeovers with customers mainly in Western Australia, Tasmania, regional Victoria, Australian Capital Territory and Northern Territory. Despite growing the easy way, it is slightly smaller than ihug. IiNet has annual revenue of about $A40 million and 130,000 customers, compared to ihug’s annual revenue of $A48 million from 170,000 customers on both sides of the Tasman (70,000 in Australia, mainly in Sydney, Melbourne and Adelaide).
Though the acquisition is being portrayed as a merger by both parties, ihug shareholders will end up with only 30% of the company (the Woods alone having 20%; other shareholders include their father John Wood, Bart Kindt, CallPlus owner Malcom Dick, and Deep Blue Corporation) and only two New Zealand representatives on the iiNet board, including ihug Chairman Keith Goodall (ihug press release, “ihug inks merger agreement with Australia’s iiNet”, 16/9/03, http://www.ihug.co.nz/info/pr/160903.html; Yahoo News, “Aussie firm buys ihug for $81m”, 16/9/03, http://au.news.yahoo.com//030916/2/lpxn.html).
Whether the new mixed culture of innovation and acquisition can thrive alongside strong personalities remains to be seen.
The OIC gives the price as $57,152,188, but a New Zealand Herald article on ihug’s web site puts the price as A$72 million or $81.9 million – according to an ihug press release, “A$30.1 million in cash and 23.7 million shares in iiNet, at an issue price of A$1.75 per share” (New Zealand Herald, “ihug sold for $82 million”, by Peter Griffin, 16/9/03, http://www.ihug.co.nz/info/pr/160903-nzherald.html). It is not clear what the OIC’s price is based on.
[Decision number 200320042.]
Multiplex buys ASB Centre in Auckland for $112,650,000
Multiplex Constructions (NZ) Limited, owned by Multiplex Construction Pty Limited of Australia, has approval to acquire the ASB Bank Centre, which is on 0.35 hectares at 135 Albert Street Auckland, for $112,650,000 from the Commonwealth Bank of Australia (Australia, 41.7%), minority shareholders in Australia (39.516%), the ASB Bank Community Trust (Aotearoa, 13.9%), and minority shareholders in Aotearoa (4.884%). According to the OIC,
The acquisition of the ASB Bank Centre is the first commercial property investment by the Multiplex “Group” in New Zealand. The proposed acquisition will expand the “Group’s” asset base, reduce its portfolio risk and provide diversification benefits to the “Group”. Multiplex intends to acquire further commercial properties in New Zealand and establish a facilities management operation in New Zealand which is likely to be similar to the operation that it currently undertakes in Australia. The proposal is likely to be in the national interest as it will enable a premium grade commercial property to be traded on the international market.
Multiplex floated on the Australian stock exchange at the end of 2003 after 41 years as a privately owned company in the hands of the Roberts family. It has an annual revenue of A$2.3 billion. The company has a reputation for being “as hard as nails” to its workers and tenants. According to the Sydney Morning Herald,
the family of a man killed on a Broadmeadows construction site in 1997 would surely agree. The victim, employed by a Multiplex sub-contractor, was killed in an accident involving a falling concrete slab. Multiplex appealed over compensation awarded to the dead worker’s family. A week ago, six years after the accident, Multiplex’s appeal was dismissed and it was ordered to pay $100,000 more to the family – a total of $300,000.
Likewise, the owners of the $35 million Goldsbrough apartment complex in the inner Sydney suburb of Pyrmont have their issues with the company. At an estimated $35 million, their claim over defects in the building was big enough to earn it a place in the Multiplex prospectus. It’s in mediation.
Founder John Roberts is a major political donor (Sydney Morning Herald, “Multiplex reaches for the sky”, 29/11/03, http://www.smh.com.au/articles/2003/11/28/1069825993875.html).
[Decision number 200320036.]
Pacific International Insurance Limited of Australia has approval to acquire 0.55 hectares at Units B1 and B2, 485B Rosebank Road, Avondale, Auckland for $952,897 from Harbourside Properties Limited of Aotearoa. Pacific International’s “key business incorporates the provision of insurance underwriting for the pest control industry in Australia”.
The Applicant is actively establishing a presence in New Zealand in the same market as part of an expansion push into the Asia Pacific region. The Applicant has previously acquired two units in the subject building, one for its own occupation and the other subject to an existing lease. The acquisition of the subject units, being the remaining units in the building, which are subject to existing leases, will provide the Applicant with the ability to expand its New Zealand operations once they have established their business presence, and an increased presence through the acquisition of naming rights for the building.
Pacific International gained approval to acquire 0.88 hectares at Units 3 and 4, 485B Rosebank Road for $913,750 in March 2003. See our commentary for that month for further details.
[Decision number 200320032.]
Key Security (Australia) buys Auckland block for retail/residential development
Key Security Investments Group (N.Z.) Limited, owned by Malcolm Jeffrey Sharpe of Australia, has approval to acquire 1.4 hectares of leasehold at the corner of Quay Street, Tinley Street and Tapora Street, Auckland for $18,900,000 from Starline Group Limited of Aotearoa. According to the OIC,
The Applicant, a subsidiary of an Australian property development company, proposes to develop a residential and small retail complex on the property which is currently utilised for short-term carparking. The proposed development is likely to comprise approximately 460 residential apartments and 1,000 square metres of retail space. Construction of the development is likely to commence in about nine to twelve months. It is envisaged that the development will be completed in approximately three years.
[Decision number 200320041.]
Waihi Gold Company Nominees Ltd, owned by Newmont Mining Corporation of the U.S.A., has approval to acquire four homes in Waihi, Coromandel from their owners. In each case,
In December 2001, a substantial ground subsidence occurred at Barry Road in Waihi which resulted in the destruction of two properties and placed another eleven properties at risk. The subsidence was associated with historic mine workings undertaken by companies no longer existing. An agreement was reached between the Applicant, the Hauraki District Council and the Earthquake Commission to enable compensation and/or relocation for the affected property owners. As part of the agreement the affected properties were transferred to the Applicant. Subsequently, a further 25 properties were identified as being subject to a risk of ground collapse as a result of the historic mine workings. These properties are in the process of being transferred to the Applicant. The Applicant has now been approached by a number of property owners in the immediate vicinity who consider that the market value of their properties has been adversely affected. The Applicant has developed a “Property Sales Assistance Programme” under which, where it can be shown that the property’s market value has been adversely affected, the Applicant will acquire the property at market value. The property the subject of this application is part of the programme. The proposed acquisition will also consolidate the buffer between the Applicant’s mine and other surrounding residential areas.
The properties are:
Waihi Gold owns the Martha Mine in the town, and is developing a new mine, the Favona Prospect. It last bought properties in Waihi due to the subsidence in June 2002, when it bought 13 properties (see our commentary for that month for details including a map of the area), and has also being buying land for the Favona development as well as the Martha Mine – see December 2002 for the last such acquisitions.
CDL Land New Zealand Limited, according to the OIC ultimately owned 22.1213% by the Hong Leong Group of Singapore, 20.095% by other shareholders in Singapore, and 57.7837% by minority shareholders in Aotearoa, has approval to acquire 10.6 hectares at Williams Street, Hastings, Hawkes Bay for $2,475,000 from RB and JA Watt of Aotearoa. According to the OIC,
The Applicant’s core business is the acquisition of land for residential subdivision and development. The proposed acquisition will further strengthen and grow the Applicant’s land bank and development portfolio. The subject property is currently utilised by the vendor as a lifestyle property with some contract cropping and grazing undertaken on the land. It is proposed that the property which is zoned general residential will be subdivided into 110 residential sections to be made available for sale to the open market. The subdivision development is likely to be carried out in three stages commencing in 2004.
CDL Land’s last purchase of land for subdivision was in June 2003, in Auckland. See our commentary for that month for further details. For a more meaningful breakdown of the ownership and control of CDL Land, see our commentary for May 2003.
[Decision number 200320030.]
Universal Homes Limited, owned 23.9% by China Merchant Holdings International Limited of China and 76.1% by minority shareholders in Singapore, has approval to acquire 6.9 hectares at Matua Road, Huapai, North Auckland, for $2,650,000 from LA and JA Barber of Aotearoa. The land “includes/adjoins land that exceeds 0.4 hectares which is provided as a reserve, a public park, for recreation purposes, or a private open space.” The OIC tells us:
The Applicant is a predominant player in the Auckland housing market with a principal activity in the development of blocks of land in the Auckland region for the construction and sale of residential house and section packages. The Applicant is continually searching for land for residential development to meet the demands of the population. It is proposed that the subject property which is approximately 20 kilometres from the Auckland CBD will be developed in conjunction with a 4.0468 hectare adjoining block of land already owned by the Applicant. The subject property also adjoins an existing residential development. The Applicant proposes to develop the property as a medium density residential subdivision comprising approximately 68 lots. The development is likely to commence in October 2004 and be completed by November 2007.
Universal Homes last received approval to acquire land in July 2003. See our commentary for that month for further details. [Decision number 200320031.]
· The Wen Ya Family Trust of Taiwan has approval to acquire 17.7 hectares at Otorohaea Trig Road, RD 2, Ngaruawahia, Waikato for $132,750 from New Zealand Forestry Group Limited, owned 76% by W Garratt of Aotearoa and 24% by J Hong of Taiwan. Like previous such sales, the purchaser is a member of the Carlyon Forest Body Corporate “which has entered into an arrangement with New Zealand Forestry Group the Vendor, to develop approximately 199.28 hectares of land at Ngaruawahia. Most of the land has been planted in forestry with the remaining area to be planted in 2003.” This sale is like many in this and other regions organised by New Zealand Forestry Group, the last such sale being in August 2003 (see our commentary for that month for further details). The investors provide the money, while New Zealand Forestry Group manages the development of the forestry operation. [Decision number 200320033.]
· A joint venture between Jam World Enterprises Pty Limited and Northbank Vineyards Limited, owned by Joseph Speziale (Australia, 32%), Michael Every (Australia, 8%), and Northbank Vineyards Limited (Aotearoa, 60%), has approval to acquire 10.6 hectares at Kaituna-Taumarina Road, Marlborough for $562,500 from PS Way of Aotearoa. “The Applicant is proposing to develop the subject property into a vineyard producing Sauvignon Blanc wine. The vineyard will be managed by Forrest Estate Winery Limited who manage other vineyards owned by the joint venture partner, Northbank Vineyards Limited. The development of the vineyard is likely to result in a more intensified use of the land which is currently used for deer farming. The vineyard will be managed in conjunction with other vineyards owned by Northbank Vineyards Limited and managed by Forrest Estate Winery Limited. This is likely to result in important economies of scale which will afford production efficiencies.” [Decision number 200320040.]
· Richard Raymond Jewell and Marilyn May Jewell of Canada have approval to acquire 19.5 hectares at Redcliffs Road, Kerikeri, Northland for $393,750 from Peter William Gerrard and Lynn Gwenneth Gerrard of Aotearoa. “The Applicants propose to acquire the subject property which is currently utilised for grazing purposes. The Applicants propose to convert the property into a long term productive unit by planting 10 hectares of the property with a blend of Frantoio and Koroneiki olive trees creating a 2,500 tree grove. Most of the remaining area of the property are steeper areas with approximately 3 hectares planted in forestry.” [Decision number 200320043.]
· Karreman Bloodstock Limited, owned by Dirk and Anne Marie Karreman of Australia, has approval to acquire 62 hectares at Roto-o-Rangi Road, Cambridge, Waikato for $4,162,500 from Norelands Stud Limited of Aotearoa. “The Applicant proposes to acquire the land, buildings and bloodstock of Norelands Stud, located near Cambridge. The Applicant has previously acquired The Oaks Stud which is adjacent to the subject property. The Applicant’s shareholders who are experienced in the thoroughbred breeding industry intend to further develop the bloodstock operation on both properties. The acquisition is viewed as a natural expansion of their involvement in the industry. The Applicant intends as part of the development of the thoroughbred business to purchase another high pedigree northern hemisphere stallion to stand at the property. This is likely to enhance the services currently available to the New Zealand thoroughbred breeding industry. The acquisition will also enable the Applicant expand its existing operation without the need to continue to lease land to agist horses on.” The Karremans acquired The Oaks in September 2002 for $5,800,000. See our commentary for that month for further details. [Decision number 200320034.]
Thirteen of the 14 investments this month involved land, and the total value approved is comparatively small, with the net value (i.e. disregarding sales from one overseas investor to another and local shareholdings) about half the gross. For the full year, the gross value is not much lower than last year at this point, but the net value is well ahead. No information was suppressed from the decisions, and no applications were refused by the OIC.
Investment involving land
Gross and net sales of land approved by the OIC during the years to September have fallen considerably in area, and the decisions this month involved very small areas of land.
Campaign Against Foreign Control of Aotearoa,
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