NZ First powerless to stop Chinese takeover
By Richard Harman (author)
New Zealand First looks powerless to stop the takeover by Chinese dairy company, Yili, of the troubled Westland Co-operative Dairy Company.
they have previously, in Opposition, vigorously attacked Chinese purchases of agriculture companies.
But now in Government they will have to stand back and let the independent Overseas Investment Office decide whether to approve the purchase.
Westland and Yili signed a conditional agreement on Monday that will see Inner Mongolia Yili offer to buy 100 per cent of the shares of the company’s existing shareholders and take over operation of Westland, following a lengthy competitive process run by Westland.
The Chief Executive Officer of the Yili Group, Mr Jianqiu Zhang, said the offer if accepted by shareholders, would result in an immediate cash windfall to farmer shareholders, as well as a competitive milk payout.
Mr Zhang said Yili had already demonstrated its commitment to local dairy farmers and its determination to be a good corporate partner with New Zealand dairy farmers.
“At our Oceania processing plant at Glenavy, we have increased the average price to local dairy farmers because we believe that supporting our farmers and their families is the best way to achieve our business goals.
“This proven track record is what Westland farmer shareholders and suppliers can expect from us if they accept our offer.”
But NZ First has previously opposed Chinese purchases of major meat and dairy processing companies, most notably Silver Fern Farms in which Shanghai Maling acquired a 50 per cent interest in 2016.
This was bitterly opposed by NZ First Leader Winston Peters and has been cited by NZX First list MP, Mark Paterson from Clutha-Southland as one of the main reasons he switched from National to NZ First.
`But yesterday Peters said Westland shareholders were entitled to sell their assets to “who they might”.
"But there is still the matter of the regulator to be looked at, and we will wait and see what happens."
Peters said his opposition to the Silver Fern farms sale was that the buyer (Shanghai Maling) got five times the information that the shareholding farmers did.
“That was wrong. I said it was corrupt. They have never sued me and guess why?”
Westland began to look for a buyer in July last year when it undertook a strategic review of its situation.
The Board of Westland Milk Products (Westland) has initiated a strategic review of the co-operative as part of its drive to realise its full potential as a leading milk processor, marketer and exporter.
Chairman Pete Morrison said the co-operative had relatively high debt levels and limited financial flexibility.
“Shareholders have clearly indicated support for a plan that would create higher returns and shareholder value, which would likely require significant new capital.
He said the strategic review process would focus on investigating a full range of options that could include:
- continuing the current co-operative model, recognising our capital constraints;
- introducing a cornerstone investor to provide new capital to fund growth; and
- a merger or divestment of the co-operative.
Last November in what was widely regarded as a bailout for the company, Regional Economic Minister Shane Jones said the Government is would loan Westland $9.9 million from the Provincial Growth Fund (PGF) to enable a milk segregation project at Westland Milk Products, Regional Economic Development Minister Shane Jones has announced.
But Jones refused to release details of the loan to ACT Leader, David Seymour, when questioned in the House.
“What interest rate is the company being charged and over what period?” said Seymour.
“If Westland Milk Products collapses, does the Government have any guarantee that taxpayers will be repaid?”
In January, National's Paul Goldsmith claimed that Westland Reports that Westland Milk was talking to well-financed potential bidders for the company including Canadian dairy giant Saputo, “which rivals Fonterra in scale and has already made significant dairy acquisitions in Australia.”
NZ First MP Mark Patterson said he was not comfortable with the proposed takeover.
“I think it is a great pity and I hope the shareholders think long and hard about taking a short term gain and what they are trading off,” he told POLITIK.
“Ultimately it is up to the shareholders if they really want to own the future.”
Patterson said Yili was only offering a payout guarantee the same as Fonterra for ten years, which was the blink of an eye in farming terms.
“It concerns me that we are losing control of our biggest industry.”
The company is arguably one of the best connected farming companies in New Zealand. federated Farmers President, Katie Milne is on its board and West Coast MP and Agriculture Minister, Damien O’Connor ‘s father was also a director.