|
Bunge and Goodman Fielder both get approval to take over Defiance Two decisions this month reflect an international struggle for the ownership of Australian owned, Christchurch-based, Defiance Food Industries, the second biggest baker in Aotearoa. The first is for Bunge Foods Queensland Pty Ltd to buy Defiance, which is a subsidiary of Defiance Mills Ltd of Australia. The price was initially "to be advised" and was released in February 1998: $128,366,745. Bunge Foods Queensland is a subsidiary of Bunge Industrial Pty Ltd which is an Australian registered subsidiary of Bunge International Ltd of Brazil.
The second decision gives consent to Quality Bakers New Zealand Ltd, a subsidiary of Goodman Fielder Ltd, a public listed company incorporated in Australia, to buy Defiance. The price is $48,000,000. Defiance entered Aotearoa by taking over the Ireland Group. It owns Country Fare Bakeries and its Christchurch mill is considered to be the best in Aotearoa. Its parent, Defiance Mills, based in Queensland, has been subject to internecine conflict between members of the controlling O’Brien family. Goodman Fielder was formed from the Australian Fielder group and the then Aotearoa-owned Goodman and Watties groups. It sold Watties to Heinz in January 1993 to pay for growing interests in Europe, Asia and elsewhere. Ironically, Goodman is now selling out of some of these European interests. At about the same time it was bidding for Defiance, it was announcing plans to sell its European milling and baking business, Meneba NV to the Dutch group, CVC Capital Partners BV, and use the $A300 million raised to treat shareholders to a share buy-back (Press, 10/3/97, "Share buyback an option for Goodman", p.35). It owns Bluebird Foods, Quality Bakers, and Champion Flourmills, and Aotearoa operations contribute 20% of its operating profit, with a turnover of over $560 million (Press, 7/2/97, "Good Fielder revamp", p.28). It has 40% of the bakery market (including the Nature’s Fresh, Mollenberg, Country Split, Vogel’s, Reizensteins, and McGregor’s brands) and more than that in milling. Farmers were concerned at the prospect of it taking over Defiance because it would mean the largest buyer of wheat swallowing up the second-biggest (Press, 8/3/97, "Defiance Food sold to Goodman’s", by Alan Williams, p.25). Initially the Commerce Commission, in an unusually decisive decision, rejected the Goodman bid. It said it had identified 15 markets affected by the proposal and was concerned that Goodman would strengthen its dominant position in the markets for making and acquiring industrial bulk and bagged flour in the South Island, making and acquiring retail and premium pastry flour in both islands, and making and selling packaged bread in the South Island. Combined market share would exceed 80% in some cases, and there was a lack of competition to constrain the group. Despite this and the apparent success of the Bunge bid, Goodman appealed the rejection in the hope of a renewed bid. Returning to its usual lapdog role, the Commerce Commission agreed, on condition Goodman sold its Champion flour mill and retail packing plant in Christchurch. Goodman obliged, arranging the sale to the third participant in the flour oligopoly, Allied Foods. (Press, 15/4/97, "Commission rejects DFI sale, but Defiance still hopeful", p.16; 10/5/97, "Goodman files appeal against bid rejection", p.26.; 18/6/97, "Goodman gets DFI go ahead", p.27.) Until the current takeover, flour production in Aotearoa was dominated by three companies: Goodman Fielder, Defiance Food Industries Ltd, and Allied Foods who together were estimated to have up to 85% of New Zealand flour milling sales and are the top three bread bakers (Press, 8/3/97, "Defiance Food sold to Goodman’s", by Alan Williams, p.25.) The first two were Australian-owned; Allied is owned by George Weston Foods of the U.K. (Press, 18/6/97, "Goodman gets DFI go ahead", p.27). In October 1996, Goodman Fielder’s and Defiance’s bread baking subsidiaries Quality Bakers New Zealand Ltd and Country Fare Bakeries Ltd respectively were each fined $150,000 by the High Court for fixing the price of bread in the South Island (Press, 18/10/97, "Bakeries pay $300,000 for fixing prices", p.1.) The Commerce Commission took action against them after discovering that two senior company representatives met at the 1993 AGM of the Baker’s Association and discussed the high level of discounting in the South Island. They then sent instructions to their South Island management specifying maximum discounts. This lasted only a short time – until they heard the Commerce Commission was investigating them. Bunge had the first success in the takeover, because the Goodman bid was ruled out of order by the Commerce Commission. However Bunge then cheerfully sold the Aotearoa subsidiary on to Goodman, leaving everyone happy but the small matter of farmers and consumers in Aotearoa. This had a feeling of déjà double vu: not only had Goodman and Defiance got into trouble in Aotearoa, but Bunge and Goodman abandoned a proposal to merge their Australian milling operations in May 1996 after the Australian Competition and Consumer Commission opposed the deal (Press, 6/3/97, "Bunge left to dangle by Defiance Mills", p.28). That is presumably why Goodman had bid only for the Aotearoa arm of Defiance. Bunge, which took over the entire Defiance group through its Australian parent, is based in Brazil and is one of the world’s five leading food transnationals. It is controlled by the Hirsch and Born families, and is a leading exporter of soya beans. George Monbiot, writer, broadcaster and academic, and author of "Amazon Watershed" on the causes of deforestation in the Brazilian Amazon, gave evidence on this issue in the marathon trial against MacDonald’s in the U.K. He said:
Bunge succeeded in taking over Defiance after a drawn-out tussle in which disgruntled O’Brien family members who didn’t like their relatives’ management of the company, took the opportunity to get out. The initial price offered by Bunge was rejected, but when it raised the offer, the O’Brien family’s Defiance Holdings, 39% shareholder, accepted despite chairman Tom O’Brien being defiant (Press, 17/4/97, "Defiance family split as Bunge increases offer", p.27). Other shareholders stuck out for a higher price after Price Waterhouse said the Bunge offer significantly undervalued the company. The final reported price was A$2.00 (A$2.05 benefit), compared with an original A$1.70, later raised to A$1.95. Even the final price was well below the A$2.39 to A$2.85 "fair value" Price Waterhouse determined. But it was forced on the company by the acceptance of the O’Brien family dissidents. (Press, 28/4/97, "Family split hands Defiance to Bunge", p.28; 1/5/97, "Defiance talks Bunge into better price", p.29.) The final act had a comic twist. Preference shareholders in Defiance were paid out their dividends in June despite having sold their shares to Bunge. Bunge then had to write to each of them asking them please to return it. One Dunedin sharebroker however, while advising people they should repay, also cannily commented that this was a situation in which possession was nine-tenths of the law. With about $350,000 at stake, it seems unlikely Bunge would either miss it in the context of the takeover, nor would it be worth its while taking legal action to recover so little from so many. (Press, "Bunge double-up: 'possession is nine-tenths of the law'", 17/6/97, p.25.) Peters and Brownes Foods of Australia takes over Tip Top Ice Cream Peters and Brownes Foods Ltd (PBFL) of Australia has approval to acquire Tip Top Ice Cream Company Ltd and Tip Top Investments Ltd from their owner, the Heinz Group of the U.S.A. Tip Top is the Aotearoa brand leader in ice cream and ice cream products. Heinz decided that it no longer fitted with its line of business, having acquired it as part of its takeover of Watties in 1993.
The sale includes seven hectares of industrial zoned freehold land at 113 Carbine Road, Mr Wellington, Auckland. The decision was originally suppressed in total and was released on appeal on 5/8/97 with the price still suppressed. Heinz put Tip Top up for sale (along with Tegel Foods) in November 1996. Tip Top holds about 80% of the national ice cream market (New Zealand Herald, 14/11/96, "Tip Top, Tegel go up for sale", by Geoff Senescall). This followed an attempt by Tip Top to take over competitor New American Ice Cream (owned by the Dairy Group) which was quashed by the Commerce Commission saying that it would give it a dominant market position. It left open the possibility of taking over only the frozen novelty, dairy desserts and scoop ice cream operations (Press, 25/10/96, "Tip Top trims bid for New American", p.19). PBFL said it would expand ice cream production in Christchurch and would not change the Tip Top brand. It markets Peters Ice Cream in Australia. It is not itself an all-Australian company: its shareholders include Asia Dairies Pte (part of Fraser and Neave of Singapore, a major shareholder in the DB Group) and Itochu Corporation of Japan (heavily involved in forestry in Aotearoa) (Press, 3/4/97, "Tip Top sold to Australian company", p.30). A major bidder for Tip Top was Nestlé, which signalled its disappointment at not winning by suggesting it may enter the ice cream market, modestly describing itself as a "global expert on ice cream". It is the second largest ice cream manufacturer in the world, and one of its international competitors, Unilever, recently started up the Streets brand in Aotearoa (Press, 7/4/97, "Failure to buy Tip Top a disappointment for Nestlé", p.35). Prudential of the U.K. buys NZI Life from General Accident of the U.K. Life insurer, Prudential Corporation Holdings Ltd, which is registered in the U.K., has approval to buy New Zealand Insurance Life Ltd from General Accident Plc of the U.K. for $163,313,973. General Accident bought NZI in 1989 and offered the operation, the third largest life insurance company in Aotearoa, for sale in February 1997 "based on General Accident’s global strategy to concentrate on building its fire and general insurance business in markets where it has a significant presence and is market leader" according to its head office in Scotland. General Accident claims to be the market leader in fire and general insurance in Aotearoa. It sold New Zealand Guardian Trust to Guinness Peat subsidiary, Tyndall Australia, in 1994 (Press, 21/2/97, "General Accident in talks to sell NZI Life", p.18). Prudential is the third largest insurer in the U.K, though NZI Life was bigger than Prudential New Zealand. Prudential claims the merged company will be the leader in Aotearoa in terms of new annual premium income and third in terms of funds under management. It will have 300,000 clients and $2.3 billion funds under management. Prudential drew the interest and concern of the local investment fraternity when it announced it would move the management of its combined investment portfolio from Wellington to Sydney. The prudence of this was questioned by David van Schaardenburg of Auckland research house, IPAC Securities, saying it would put Prudential "out of the information loop when you get beyond the leading stocks". NZI’s portfolio had been managed by Guardian Trust, making up about half of its $2.7 billion managed funds, but the contract for that was to expire in June 1997. Van Schaardenburg put the merged group at fifth by total funds managed, behind AMP, National Mutual, Tower and "probably" Southpac (Press, 27/3/97, "Prudential buys NZI Life for $163.3m", p.18; 29/3/97, "Prudential plans to run NZI funds", p.21). The consequences of the merger hit home in April when Prudential cut 148 jobs "as a result of streamlining its operations in New Zealand and Australia". Although there would be no further redundancies for another six months, the company was still "working through the integration of the two companies’ operations". Financial sector union, FinSec, said the entire staff of NZI Life in Aotearoa faced an insecure future, with the jobs of those remaining guaranteed for only six months (Press, 25/4/97, "More than 270 jobs lost", p.3). Misys of the U.K., computer specialists in banking and securities buys Mocom Misys Plc of the U.K. has approval for two of its subsidiaries, Misys International S.A. of Luxembourg, and MKI Financial Systems Pty Ltd of Australia, to acquire two companies: Mocom Systems (NZ) Ltd and Mocom Corporation (NZ) Ltd respectively. The prices are $55,472 and $8,194,655 respectively. "The Misys group serves the information technology needs of a number of markets including banking and securities." Viaduct Basin land sold by Turners and Growers to Heng Holdings of Singapore Turners and Growers Ltd has sold just over two hectares of land in the Viaduct Basin in the Central Business District of Auckland to Heng Holdings S.E.A. (Pte) Ltd of Singapore for "approximately $17 million". Heng Holdings is a subsidiary of Tong Nam Contractors Pte Ltd which is 90% owned by Heng Hiang Boon and Heng Boon Heng and 10% by Mrs Tan Leng Cheng, all of Singapore. "Heng Holdings is primarily in the business of property development and investment. … It is proposed to undertake a multi purpose development on the land, which will include tourism, leisure and entertainment, commercial and residential facets." In 1994, Guinness Peat Group of the U.K., controlled by Ron Brierley, bought the Turner family’s 25% shareholding in Turners and Growers, and later raised its holding to 28%. GPG’s main interest in Turners was the five hectares of land it owns in Viaduct Basin, which are next to the proposed America’s Cup headquarters, and were expected to rocket in value for the cup challenge. According to NZPA (Press, 8/3/97, "Viaduct Basin land nets $17m for Turners, Growers", p.27), this sale almost completes the sale of the five hectares, bringing total proceeds to $24.1 million. All that remains is the Seamart building, worth about $3 million. Since the value Guinness Peat put on Turners in 1994 equated to about $30 million for the whole company, the Viaduct Basin sale will return it a very tidy profit. GPG paid approximately $7.4 million for its initial 25%. NZPA puts the current sale at 2.4 hectares, whereas the OIC approval is for 2.2766 hectares. It includes the Old Market Buildings, the New Market Building, and the Jaybell car park. Heng Holdings plans a $350 million development using overseas loans (mainly from Singapore) including a 300-room five-star hotel, leisure and entertainment centre, housing and shops. Kiwi Income Properties buys Hong Kong Bank House, Queen St, Auckland Kiwi Income Properties Limited, which is 50% owned by FCMI, a public company from Canada, and 50% owned by residents of Aotearoa, has approval to acquire the Hong Kong Bank House, 290 Queen Street, Auckland, including 0.0977 hectares of land, for "approximately $18,250,000". Kiwi Income Properties Ltd "acts as agent and manager" for Kiwi Income Property Trust, a New Zealand listed unit trust which has "less than 15% of the units held by various overseas persons". The building is being acquired from Sintau Limited.
Australian company buys Timeout Northlands in Christchurch L.A.I. Asia PTE Limited, a wholly owned subsidiary of Steinberg International Pte Limited of Singapore, which in turn is ultimately owned by Aberdee Pte Limited (as trustee for the MD Steinberg No. 3 Trust, the beneficiaries of which are M D Steinberg and his family) of Australia has approval to acquire up to 50% of Timeout Northlands Ltd for $8,000,000.
Carter Holt buys forestry rights on 19 ha. at Brightwater, Nelson Carter Holt Harvey Ltd, 51% owned by International Papers of the U.S.A., has approval to acquire the forestry rights to 19 hectares of land at Wairoa Gorge Road, Brightwater, Nelson for $1.00 plus GST per annum. The afforested land was sold to the current owners by Carter Holt because it was surplus to their requirements. The right expires on 31/3/2005. Application to buy land for lifestyle purposes on Great Barrier Island refused The OIC has refused another application. It refused one in 1996, the first since 1990. Perhaps this is now becoming an annual event. This month’s refusal was for a resident of Germany to acquire "land exceeding 0.4 hectares on Great Barrier Island" for "lifestyle purposes". The area of the land and proposed price are not revealed.
|
 |