New Zealand-China meat deal set for new year after clearing final hurdle

WELLINGTON - Authorities in New Zealand on Tuesday gave the final go-ahead to the country's biggest meat cooperative to sell a half stake to China's biggest meat processor.

Minister for Land Information Louise Upston and Associate Minister for Finance Paula Bennett gave the approval of Shanghai Maling's application to purchase a 50-percent interest in Silver Fern Farms (SFF).

They said in a statement that the decision followed a recommendation from the government's Overseas Investment Office (OIO) to approve Shanghai Maling's purchase application.

"We are satisfied that the investment will be of substantial and identifiable benefit to New Zealand, which is the test set out in the (Overseas Investment) Act. The investment will put the company in a better financial position and allow it to increase its exports," they said.

"New Zealand shareholders will continue to have 50-percent ownership of Silver Fern Farms, while benefiting from the injection of funds from the new investor."

The OIO had to assess the application for the purchase - valued at NZ$261 million ($191.02 million) - as it was an overseas investment in "sensitive land and significant business assets."

The OIO decision said SFF was the largest livestock processing and marketing entity in New Zealand, and owned around 1,769 hectares of sensitive land.

"SFF has been, and continues to be, operationally constrained by a high level of debt. The investment is expected to result in SFF reducing its debt to nil and having cash reserves. This will allow SFF to invest in and improve the efficiency of its plant network as well as advance its value-added strategy," it said.

Shanghai Maling would help SFF gain a greater presence in China through assistance with product development, market research, government approvals and access to e-commerce sites and 2,000 retail stores over a period of three years.

"New Zealanders, through the SFF Co-operative, will continue to have significant oversight and participation in the investment. SFF's existing meat processing operations will remain in New Zealand," it said.

Silver Fern Farms welcomed the approval, saying the investment was now unconditional and set to complete on Jan 4, 2017.

"Shanghai Maling's financial investment will make Silver Fern Farms the financially strongest company in the New Zealand meat industry with the ability to confidently invest in our business," SFF Chairman Rob Hewett said in a statement.

Silver Fern Farms, a farmer-controlled co-operative with more than 6,200 ordinary shareholders and more than 16,000 farmer partners, operates 18 processing facilities throughout the country, employing more than 7,000 staff.

Shanghai Maling is a leading Chinese food manufacturer, processer and distributer with direct control of 800 supermarket and retail stores.

The deal has been beset by controversy with a small group of Silver Fern shareholders staging a revolt and demanding a new vote on its approval after claiming the board and executives misled them on its debt levels.

In October last year, SFF shareholders voted 82.22 percent in favor of the deal and a second vote in August saw it passed by 80.4 percent.

The Financial Markets Authority, the market watchdog, in May cleared the board of issuing misleading or deceptive documents.