Overseas investment decision for case 200810018 - Nutritek Overseas Pte Limited

The application has been approved as it met the criteria.

The Overseas Investment Office is satisfied that the individuals with control of the Applicant collectively have business experience and acumen relevant to the overseas investment, and that the Applicant has demonstrated financial commitment towards the overseas investment.

The Overseas Investment Office is further satisfied that each individual that exercises control over the Applicant is of good character and is not an individual of the kind referred to in section 7(1) of the Immigration Act 1987.

Background:
Nutritek Overseas Pte. Ltd (the Applicant) is a wholly-owned subsidiary of Nutritek International Corp (a British Virgin Islands incorporated company) which is in turn wholly-owned by Nutrinvestholdings (Holdings). Holdings is listed on the Russian Trading System (Russia's equivalent of the New Zealand Stock Exchange).

Holdings (through its various subsidiaries) is one of the leading producers of baby food and dairy products in Russia and other Commonwealth of Independent State countries by revenue. The core business activities of Holdings comprises the production of baby food, which includes clinical nutrition products and dairy products. Holdings' head office is located in Moscow and it operates production facilities in Russia, Estonia and Ukraine.

Holdings, through the Applicant, currently owns 5.65% of New Zealand Dairies Limited (NZDL), which was incorporated in 2006 to build a milk processing plant at Studholme, South Canterbury. The plant started processing milk in September 2007.

Outline of the proposed investment:
The Applicant is seeking consent to acquire up to 100% of the ordinary shares in NZDL. It has currently entered into deeds of sale and put options to acquire approximately 82% of the ordinary shares of NZDL (including its existing 5.65% holding, and following the issue of additional ordinary shares by NZDL in discharge of NZDL's debts to the Applicant).

Rationale for the proposed investment:
Holdings' strategy is to expand into China and South East Asia. It has agreed to purchase substantial volumes of milk powder from NZDL to use in joint ventures that it has established in China. A large portion of the Applicant's purchases from NZDL will be infant formula, which is of higher value than other milk powders.

The proposed investment is part of the Applicant's commercial strategy to secure a stake in NZDL both as a pure investment and as a means of ensuring that the quality controls and quality standards of NZDL comply with international best practice standards.

The proposed acquisition is or is likely to result in the following benefits to New Zealand, including:

Overseas Investment Act 2005
Section 17(2)(a)(i) - creation of new job opportunities in New Zealand or the retention of existing jobs in New Zealand that would or might otherwise be lost
Section 17(2)(a)(ii) - introduction into New Zealand of new technology or business skills
Section 17(2)(a)(iii) - increased export receipts for New Zealand exporters
Section 17(2)(a)(iv) - added market competition and greater efficiency, in New Zealand