Overseas investment decision for case 201420108, 201520044 - Milk New Zealand (Shanghai) Co., Ltd. & Hunan Dakang International Food & Agriculture Co., Ltd

An overseas investment in sensitive land, being Milk New Zealand (Shanghai) Co., Ltd.’s acquisition of rights or interests in 100% of the securities of An Yuan Dairy Limited which owns or controls approximately 7,892.5120 hectares of land being various dairy farms known as the ‘Crafar Farms’ situated in the North Island.

An overseas investment in significant business assets, being Milk New Zealand (Shanghai) Co., Ltd.’s acquisition of rights or interests in 100% of the securities of An Yuan Dairy Limited, the consideration of which exceeds $100m.

An overseas investment in sensitive land, being Hunan Dakang International Food & Agriculture Co., Ltd.’s acquisition of fiduciary management rights in respect of New Zealand Standard Farm Limited’s shareholder rights in SFL Holdings Limited which owns or controls approximately 4,559.7658 hectares of land being various dairy farms known as the ‘Purata Farms’ (previously Synlait Farms) situated in Canterbury..

Milk New Zealand (Shanghai) Co., Ltd.
Zhaobai Jiang, China, People's Republic of (54.7272%)
China Public (44.72%)
Lei Jiang, China, People's Republic of (0.5528%)

Hunan Dakang International Food & Agriculture Co., Ltd
Zhaobai Jiang, China, People's Republic of (54.7272%)
China Public (44.72%)
Lei Jiang, China, People's Republic of (0.5528%)

Existing Shareholders of An Yuan Dairy Limited
Zhaobai Jiang, China, People's Republic of (99.0%)
Lei Jiang, China, People's Republic of (1.0%)

New Zealand Standard Farm Limited
Zhaobai Jiang, China, People's Republic of (99.0%)
Lei Jiang, China, People's Republic of (1.0%)

Zhaobai Jiang will continue to be the majority owner of, and continue to have control of, Crafar Farms and Purata Farms but his interest will be diluted to approximately 55% with the remainder being widely held by the Chinese public.

The Applicants intend to undertake several key initiatives on Crafar Farms as a result of the investment being:

• conversion and improvement of an area of land to dairy farming units over a period of five years;
• investment into new irrigation infrastructure and upgrades of existing irrigation infrastructure; and
• installation of telemetry technology across the farm portfolio.

The Applicants estimate that the implementation of the investment plan is likely to result in an increase in its annual production of milk solids and additional job opportunities on Crafar Farms.

The Applicants have also undertaken previous investments that have been of benefit to New Zealand.

The overseas investment transaction has satisfied the criteria in sections 16 and 18 of the Overseas Investment Act 2005. The 'substantial and identifiable benefit to New Zealand' criteria were satisfied by particular reference to the following factors:

Overseas Investment Act 2005
17(2)(a)(i) – Jobs
17(2)(a)(iii) – Increased export receipts
17(2)(a)(iv) – Greater productivity
17(2)(a)(v) – Additional investment for development purposes
17(2)(a)(vi) – Increased processing of primary products
17(2)(d) – Historic heritage

Overseas Investment Regulations 2005
28(e) – Previous investments
28(f) – Advance significant Government policy or strategy