OIO green light for Synlait purchase
Synlait’s $112 million bid for South Canterbury dairy processor Dairyworks has been given the green light by the Overseas Investment Office.
As BayWa went through processes of buying the major shareholding in T&G, Hipkins says its impression of the OIO was of a huge government department “all-powerful and telling the world what to do”.
“They didn’t believe me when I said it is actually four people stuck in the bowels of the Land Transfer Department, snowed under because they had this issue re Crafar Farms; that’s why [BayWa’s] case had been delayed,” Hipkins told the HortNZ conference in Auckland.
“They all looked at me and virtually said to a man, ‘b****’. They couldn’t believe our foreign investment was controlled by such an august group.
“Then you throw in the Crafar farm situation, where you have the judiciary changing the rules of the game with five minutes to play. They couldn’t understand that situation. You try to explain that to people wanting to spend hundreds of billions in this country.
“We really looked like Mickey Mouse turkeys and that is the only way I can explain it. The question was asked, ‘Is it because we are German?’ That was quite literally the thought going through the BayWa executives’ minds.”
BayWa now controls 73% of T&G. Two other important shareholders were Baytel, the Equadorian Bonita banana supply company, an historical shareholding which has stood the test of many generations; and new entrant Scales Corporation with 10%. About 4.3% is spread around 650 individual shareholders.
Hipkins says T&G employs 1300 and its main products are apples, tomatoes, citrus and kiwifruit.
The domestic market was important and dominant as the company’s revenue source, and would remain so, he said.
BayWa were “Fonterra size” with a turnover of almost 10 billion euros (NZ$16-17 billion). The company was the largest pipfruit supplier to the German retail sector and the largest supplier of organic pipfruit.
“Their facilities are literally state-of-the-art and reek of high investment,” he said. The company had longstanding relationships with the significant food retailers in the European market, and part of their move into New Zealand was the need to command shelf space for 12 months of the year.
They saw the potential to increase T&G earnings by applying some of their efficiencies and the potential of the two key apple varieties Jazz and Envy. “But also the name Enza, the power and residual of the Enza brand internationally is significant. We should all thank the Apple and Pear Board who spent millions on the promotion internationally.
“BayWa also saw T&G being active in the Asian markets now and an opportunity to grow on that. They saw the T&G balance sheet being somewhat lazy in that we owned and own a tremendous lot of land and buildings; they looked at the worth if we sold the land and buildings.”
A platform of BayWa business has been long-term relationships with growers, and that model was being reinforced to T&G in moving forward, Hipkins said. “We are looking at a consolidation particularly in the apple industry, and that flows on to consolidating logistics and distribution and getting the grower as close as possible to the final point of consumption.”
