Overseas investment decision for case 201320041 - SFL Holdings Limited

Consent has been granted to SFL Holdings Limited to acquire up to 100% of the shares in Synlait Farms Limited, which will result in:

(a) an overseas investment in sensitive land, as Synlait Farms Limited owns or controls:

(i) “B24 Dairies” and “Treevale Farm”: 438.2239 ha freehold;
(ii) “Beacon Dairies”: 379.3591 ha freehold;
(iii) “Colosseum”: 275.3515 ha freehold;
(iv) “Delaborin Dairies”: 375.0146 ha freehold;
(v) “Dunsandel One” and “Dunsandel Two”: 576.9113 ha freehold and 36 ha leasehold;
(vi) “Lighthouse Dairies”: 230.5995 ha freehold;
(vii) “Morton Marsh Dairies”: 308.0581 ha freehold;
(viii) “Riverlands Dairies”: 640.4592 ha freehold;
(ix) “Robindale Dairies”: 586.5238 ha freehold and 51.9141 ha leasehold;
(x) “Tapatoru Farm”: 318.2545 ha freehold; and
(xi) “Waitai Farm”: 343.0962 ha freehold.

(b) an overseas investment in significant business assets, as the value of the assets of Synlait Farms Limited and its 25% or more subsidiaries is more than $100m.

The Applicant is seeking consent to acquire both sensitive land and significant business assets under the Act.

The Applicant has made a takeover offer under the Takeovers Code for all of the shares in Synlait Farms Limited.

The largest shareholders of Synlait Farms Limited are its three founders: Juliet Maclean (17.4%), Ben Dingle (17.38%) and John Penno (15.25%).

Synlait Farms Limited owns 13 dairy farms, comprising approximately 4,559 ha in total (4,471 ha freehold, 88 ha leasehold). The dairy farms are all located in Canterbury, near Dunsandel, Hororata and south of Ashburton.

The Applicant will finance the acquisition by way of cash contributions from the Applicant’s shareholders.

The overseas investment transaction has satisfied the criteria in sections 16 and 18 of the Overseas Investment Act 2005. The s16(1)(e)(ii) 'benefit to New Zealand' criterion was satisfied by reference to the following factors:

Overseas Investment Act 2005
17(2)(a)(i) – Creation of 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
17(2)(b) – Indigenous vegetation/fauna

Overseas Investment Regulations 2005
28(e) – Previous investments
28(f) – Advance significant Government policy or strategy
28(i) – Economic interests
28(j) – Oversight and participation by New Zealanders

Ministers considered that the benefit under s16(1)(e)(ii) is likely to be substantial and identifiable under s16(1)(e)(iii) having regard to the relevant factors listed above collectively, and having particular regard for the following factors:

• The creation of six and a half full time equivalent jobs and various contracting jobs (s17(2)(a)(i));
• The introduction into New Zealand of $6,012,000 from overseas for development purposes (s17(2)(a)(v));
• Previous investments that have been, or are, of benefit to New Zealand, being Milk New Zealand Holding Limited’s overseas investment in 16 North Island farms and Juliet Maclean and John Penno’s establishment of Synlait Farms Limited and Synlait Milk Limited (r28(e)); and
• The giving effect to or advancement of the NZ Inc China Strategy (a significant Government strategy) (r28(f)).