Archive | Business sales

Commission sets out preliminary issues on Daiken takeover of Dongwha MDF business

The Commerce Commission published a statement of preliminary issues yesterday relating to Daiken NZ Ltd’s proposed acquisition of Dongwha NZ Ltd.

It’s a standard but comprehensive list of competition checks & balances (see the link below).

Daiken lodged its application on 3 October. The commission has invited submissions by Thursday 2 November and is scheduled to make a decision on the application by 30 November. However, the decision date could be extended.

Daiken is the New Zealand subsidiary of Daiken Corp, a Japanese company specialising in the manufacture & supply of wood-based construction materials. In New Zealand, Daiken manufactures & supplies medium density fibreboard (MDF) from a plant it operates in North Canterbury.

Laminex gets supply agreement

Under a product supply agreement with Daiken, Laminex would continue to be supplied with raw MDF from the Southland plant.

Daiken said the agreement would enable Laminex to continue to compete with it and with New Zealand’s third raw MDF manufacturer, Nelson Pine Industries Ltd, in the supply of raw MDF to customers in New Zealand.

Daiken submitted that Dongwha NZ was a “fringe competitor” in the supply of raw MDF within New Zealand because it had long been primarily export focused and, setting aside its sales to Laminex, accounted for a very small proportion of sales in New Zealand.

Daiken also submitted that the proposed merger would not give rise to a material lessening of competition in the manufacture & supply of raw MDF in New Zealand because:

  • Nelson Pine is the largest competitor in the New Zealand market at present, and would continue to exert significant competitive constraint on the merged entity, including by being able to divert significant volumes destined for export to New Zealand customers if market opportunities were to arise;
  • raw MDF is sold in a global commodity market, meaning that prices to New Zealand customers are pinned to conditions in that global market, rather than by standalone competitive dynamics in the New Zealand market;
  • overseas manufacturers of raw MDF in Australia, Asia & South America could import & supply raw MDF in New Zealand if New Zealand manufacturers were to price raw MDF above global market levels;
  • substitutability of MDF for particle board placed additional competitive constraint on the supply raw MDF in New Zealand;
  • new entrants could be incentivised to enter;
  • customers are highly price conscious, push back in negotiations on price increases, and are willing to switch suppliers if they can obtain a cheaper price; and
  • the merger would not materially change the existing degree of competition in New Zealand because the product supply agreement Daiken & Laminex would enter into ancillary to the merger would ensure that Laminex has sufficient volumes to continue to compete, as market opportunities arise, with the merged entity & Nelson Pine in the sale of raw MDF in New Zealand.

The parties

Dongwha is 80% owned by Dongwha International Co Ltd (incorporated in Hong Kong, controlled by Dongwha Group of South Korea) and 20% owned by Fletcher Building Ltd subsidiary Laminex Group (NZ) Ltd. In New Zealand, Dongwha manufactures & supplies MDF from a plant it operates in Southland.

Its minority shareholder, Laminex, buys MDF from Dongwha for its own wood products business in New Zealand. Laminex also on-sells some of the MDF it purchases from Dongwha to other parties.

Dongwha bought the New Zealand business from US timber company Rayonier Wood Products LLC in 2005, and Laminex bought 20% from Dongwha in November 2007.

Link:
Commerce Commission, clearances register, Daiken-Dongwha

Attribution: Commission release & website.

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New NZ Oil & Gas suitor noted for global shipping, cruise & property interests

NZX-listed NZ Oil & Gas Ltd’s new suitor – favoured by the board – is a subsidiary of an international conglomerate headed by Eyal Ofer (pictured), who has interests globally in shipping, the cruise sector, real estate, hospitality, banking & financial investments.

Mr Ofer chairs the Ofer Global Group, a private portfolio of international businesses, and he also chairs the world’s second largest cruise ship company, Royal Caribbean Cruises Ltd, whose fleet includes Ovation of the Seas, one of the largest cruise ships to visit New Zealand.

Among Mr Ofer’s other interests, he has recently financed 2 large conversions & a new office development in New York through Global Holdings, a private real estate group that specialises in largescale commercial real estate and high-end residential developments in top-tier cities.

He also chairs the Zodiac Group, a private organisation based in Monaco that owns a fleet of over 150 large ocean-going vessels trading worldwide and operated through Zodiac Maritime in London.

The NZ Oil & Gas contest

The Ofer subsidiary, OG Oil & Gas Ltd, told NZ Oil & Gas’s board in a letter last Friday it proposed to make a partial offer of 77c/share, lifting its stake from the present 4.3% to a range of 50-70% and trumping the partial & conditional 72c/share offer from Singaporean company Zeta Energy Pte Ltd for 42%, which would lift its stake over 50% (the minimum condition) from the present 21.2%.

The Ofer subsidiary’s letter went into considerable detail on why it thought the Zeta offer would provide a poor outcome for NZ Oil & Gas shareholders, and offered the prospect of wider interest in the New Zealand economy.

OG Oil & Gas said it was working with advisors Bell Gully & First NZ Capital to prepare the relevant documentation required to implement its proposal and expected to finalise a takeover notice within the next 2 weeks.

NZ Oil & Gas chair Rodger Finlay told shareholders in a newsletter on Monday the Ofer proposal “is not yet a formal offer and there is no certainty that it will develop into a formal offer. However, on the basis of the material disclosed to date, and if it becomes a formal offer, it appears superior to the offer from Zeta.”

NZ Oil & Gas said on Friday its independent directors’ initial view was that “the [Zeta] offer lacks merit and the price is too low”. On the information available, they expected to unanimously recommend that shareholders reject the Zeta offer, which was made on 10 August. The target company statement, including a report from the independent advisor, Northington Partners Ltd, will be sent to all shareholders by 22 September.

Zeta’s parent, ASX-listed Zeta Resources Ltd, invests in a range of resources activities, including, gold & base metals exploration & production.

The target company, NZ Oil & Gas, had a market capitalisation of $99 million as at 8 August. It holds a 4% interest in the Kupe oil & gas field in the offshore Taranaki basin and is participating in 2 deepwater prospects off the South Island, including the Barque prospect. The company also holds a 50.01% shareholding in ASX-listed Cue Energy Resources Ltd.

NZ Oil & Gas completed a return of capital by way of a court-approved scheme of arrangement on 12 May, cancelling one in every 2 fully paid shares. 159.4 million shares were cancelled and $99,999,317 was paid to shareholders.

The Ofer rationale

The Ofer subsidiary said it was making its proposal for 3 reasons: “First, we believe now is the right time in the exploration & development cycle to invest in the oil & gas sector. After many years of lean investment, we feel there is a unique opportunity for companies that are willing & able to prudently deploy resources towards new exploration.

“Second, we think New Zealand is the right place to make this investment. We are excited to have another opportunity to invest meaningfully in New Zealand, an area where our group has had success in the past. As you will recall, through our affiliate Omni Offshore Terminals, a global leader in the provision of floating production storage & offloading units to the offshore oil & gas industry, we invested more than $US300 million in a floating production storage unit for the Maari oilfield.

“Our group is eager to return to doing business in New Zealand. Geographically, NZOG’s Wellington headquarters fits well within our group’s global footprint, which includes a significant presence throughout Asia.

“We have been present for more than 30 years in Tokyo, for more than 25 years in Singapore and for more than 10 years in Shanghai, and we are excited about making Wellington our entry point into Australasia.

“In addition, we have noted NZOG’s commitment to working closely with local communities in the areas where they operate, an approach that we share. Each of the businesses in the Ofer Global Group has been built on investments in long-term relationships in the communities where they are based.

“Third, we believe NZOG has the right leadership to cultivate the substantial value embedded in the company. It was through the Maari floating production storage unit project that we first met members of NZOG’s management & executive team and came to appreciate their values & capabilities.

The criticism

“Our experience on the Maari project and our more recent opportunities to work in conjunction with the NZOG team have affirmed our belief that OG Oil & Gas can work successfully with NZOG in the future. Given our excitement about NZOG’s current & prospective opportunities, we were disappointed to learn that NZOG’s largest shareholder, Zeta Resources, views the company as ‘essentially a cashbox.’

“While Zeta’s proposal to return $50 million to shareholders is conditional on both shareholder approval & a binding ruling from Inland Revenue (and thus far from certain), if successful it would leave NZOG without the means to attract the high quality partners necessary for sustainable growth or to execute on the opportunities before it today.

“We believe the company is appropriately capitalised for the exciting opportunities at its disposal. To put it simply, we think Zeta’s stated focus on reducing NZOG’s financial resources and reducing headcount is in direct conflict with enhancing shareholder value, puts the company at risk of losing its valuable foothold in New Zealand and does little or nothing to increase private sector investment in the New Zealand economy.

“In contrast, OG Oil & Gas believes that NZOG’s current resources should be retained and focused on responsibly pursuing attractive investment opportunities in the exploration & production sector. To take one example, OG Oil & Gas believes that a suitable farm-in partner will be found for the Clipper exploration permit. Following the establishment of such a joint venture, OG Oil & Gas is very optimistic about, and strongly supportive of, the Clipper exploration. We likewise believe that NZOG’s interest in the Toroa prospect should be diligently pursued. We expect our group’s many relationships will be valuable in finding suitable farm-in partners for these prospects.”

Link: Ofer Global

Attribution: Company releases to NZX, Ofer websites & reports, Lloyds List, Wall St Journal.

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When you saw the news on an office tower foyer screen…

VMO (Val Morgan Outdoor), which specialises in outdoor advertising such as digital billboards, has extended its network of digital office tower screens to Wellington and now has 80 screens on 50 buildings in New Zealand – a year after launching the concept on this side of the Tasman.

The company is also going small, and more obviously so to office workers, as it targets a new & potentially bigger market in corporate lobbies.

VMO managing director Anthony Deeble said the company was at the forefront of the digital out-of-home market in New Zealand with VMO Work: “It’s a unique media platform connecting advertisers to a valuable audience of working professionals. It plays full motion video as well as up-to-date news & sports, financial information, weather and the property’s directory information. Strategically positioned in high-traffic thoroughfares in office buildings, such as lift wells & lobbies – the network provides an informative & engaging media channel for professionals.

“We plan to at least double the number of screens in premium office buildings in both the North & South Islands by the end of the year.”

VMO spent $2 million creating its New Zealand network, and Mr Deeble said the company had visions of leading this market internationally: “Our vision is to be a world leader in digital outdoor using world-class technology & innovation.”

The screens aren’t just about advertising – they may show news bulletins, the weather or building information.

The VMO Work business model is based on over 14 years of digital out-of-home experience in Australia, and last year it launched DART – Digital-outdoor Audiences in Real Time – to New Zealand. “DART – VMO’s exclusive real-time audience measurement system – uses audience measurement devices to anonymously analyse audiences to demonstrate who has viewed a campaign and how long they have engaged. Across the VMO Work network, DART measures 15,000 New Zealand viewers/week.”

VMO’s New Zealand general manager, Gordon Frykberg, said both the screens & technology were market-leading.

VMO is a division of Australian & New Zealand media & entertainment company the Hoyts Group, which the Dalian Wanda Group of China bought in 2015.

Attribution: Company release.

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Tetra Tech reaches 52% of Coffey

Californian company Tetra Tech Inc appears to have succeeded in its offmarket takeover offer for Sydney-based geotechnical engineering company Coffey International Ltd. At the close on Monday, Tetra Tech said it had a relevant interest in 43.21% & acceptances for 8.79%, giving it a total 52% of Coffey.

Tetra Tech & Coffey executed a bid implementation agreement on 14 October, and Tetra Tech launched its formal bid at A42.5c/share on 6 November, extended to 23 December. The shares have been in a trading halt for 2 days, to be lifted this morning, for Coffey to explain resolutions relating to executive share issues passed at its annual meeting.

The trading halt request coincided with a statement from Coffey that its directors unanimously recommended Tetra Tech’s offer, subject to there being no superior offer.

Tetra Tech is provides consulting, engineering, programme management, construction management & technical services worldwide.

Attribution: Company releases.

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KPMG Australia acquires SGA Property Consultancy

Accountancy business KPMG Australia has acquired independent chartered building & environmental firm SGA Property Consultancy Pty Ltd. Commercial terms of the deal weren’t disclosed.

SGA provides property transaction, property management, corporate real estate & environmental consultancy services to major property investors, managers & operators in Australia, New Zealand & Asia. It has 65 professionals – predominantly chartered building surveyors, building certifiers, engineers & environmental scientists – operating from 7 office.

KPMG Australia chief executive Gary Wingrove said on Friday the acquisition was driven by surging international investor interest in Australian real estate, combined with a desire to expand the accountancy firm’s property advisory portfolio to include technical consultancy.

SGA managing director David Myers, founder Stephen Allan, Bruce Corrin & David Mansfield will becomes partners of the expanded KPMG. Mr Myers said: “The integration of our firms will allow us to fast-track our domestic & global growth ambitions. We are experiencing strong growth in Malaysian & Singaporean-based projects while, locally, we are consulting to a significant & rapidly growing number of inbound Asian investors, including Chinese.

“Chinese investors view Australia as a safe haven for investment. They are investing in premium property, albeit often on a tighter yield than other markets. Our work involves assessing existing properties for these clients, as well as undertaking risk analysis on redeveloping commercial property for residential use.”

Attribution: Company release.

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Aecom offers $US4 billion for URS

Aecom Technology Corp & URS Corp said on Sunday they’d executed a definitive agreement for Aecom to acquire all outstanding shares of URS for $US4 billion. Another $US2 billion has been allowed for the assumption of debt.

The 2 companies, Aecom based in Los Angeles, URS in San Francisco, expect the takeover to be completed by October.

Aecom has been on the more aggressive growth path of the 2 engineering-based consultancies, which included acquiring most of Davis Langdon in 2010, but was still smaller than URS – 45,000 employees versus 50,000, $US8 billion of earnings in 2013 versus $US11 billion.

The takeover offer in cash & stock is at $US56.31/URS share, 19% above the average price over the 30 days to last Friday, and equal to $US33.00 in cash & 0.734 of an Aecom share, with the aim of a total payment made up of 59% cash, 41% stock. URS shareholders would end up owning 35% of the enlarged Aecom.

Aecom said it expected the combination to be accretive to its GAAP earnings/share and more than 25% accretive to its cash earnings/share in fiscal year 2015, excluding transaction-related costs. It also expected cost synergies of $US250 million/year, nearly all of which it expected to achieve by the end of fiscal year 2016.

In New Zealand, Aecom took over Davis Langdon NZ Ltd in 2010, with a history tracing back through Worley Consultants Ltd, Meritec Ltd & Maunsell Ltd. URS took over Woodward-Clyde (NZ) Ltd in 1997.

Link: Offer website

Attribution: Company release.

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Propbd on Q M27Jan14 – Billboard business sale complete

3.15pm:
APN completes billboard business sale to Quadrant

APN News & Media Ltd has completed the $A69 million sale of its remaining interest in billboard operator APN Outdoor to Quadrant Private Equity.

APN said last Friday it would get $A60 million immediately and the balance in June 2015. The deal was announced last October.

APN continues to operate in the outdoor advertising sector through its 50% interests in both Adshel & Hong Kong Outdoor.

Attribution: Company release.

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PropertyIQ renamed CoreLogic, which takes 60% of enlarged venture

California-based CoreLogic Inc, which completed its acquisition of RP Data Ltd of Australia in May 2011, has put its name on the merged business of PropertyIQ NZ Ltd.

The Commerce Commission cleared PropertyIQ NZ last week to acquire the business & assets of Terralink International Ltd, which the Government privatised in 2001. The commission said the Government owned 50% of PropertyIQ through Quotable Value Ltd, and RP Data Ltd, of Brisbane, owned the other 50%. However, the Companies Register shows CoreLogic has a 60% stake through RP Data, and the Government 40%.

PropertyIQ NZ became Corelogic NZ Ltd on 19 November. The organisation itself is finding it hard to keep up with the changes. Research director Jonno Ingerson issued a release today from PropertyIQ, although it was already renamed CoreLogic. 3 weeks earlier he was issuing his regular release as research director of Quotable Value Ltd.

Chairman Bill Osborne said on Friday CoreLogic NZ would operate as a merged entity from 1 January 2014.

Attribution: Company & Commerce Commission releases, Companies Register.

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AWF to confirm Madison purchase in fortnight

AWF Group Ltd has called a shareholder meeting for Monday 18 November to approve its $36 million purchase of Madison Recruitment Ltd & Madison Force Ltd, which will add white-collar recruitment to AWF’s blue-collar labour force base.

AWF chairman Ross Keenan said the Madison Group was a market leader in the recruitment sector with offices in the Auckland cbd, East Tamaki, Hamilton, Wellington & Christchurch.

AWF is to pay $30 million at completion plus up to $6 million payable subject to earnings for the 52 weeks from 4 November 2013 exceeding certain thresholds. AWF will fund the purchase through new debt facilities with ANZ Bank.

Attribution: Company release.

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Horizon adds Airpro & Clean Air Management to Aquaheat

Horizon Energy Group subsidiary Aquaheat NZ Ltd has entered into an agreement to acquire the assets of Airpro Service Ltd & Clean Air Management (2005) Ltd, both majority owned by Auckland businessman Malcolm Clark.

Mr Clark said he was pleased “the business has been sold to a New Zealand-owned company that is supported by a well resourced parent and has clear plans to grow & develop the business further. I am delighted that Aquaheat have offered employment to all staff and I will personally be working with the new owners over the coming weeks to ensure a smooth transition”.

Horizon chairman Robert Tait said: “This acquisition complements our existing Auckland contracting business and is consistent with our strategy to build a national HVAC service business.

“The Airpro Service & Clean Air Management businesses will become trading divisions of Aquaheat and we will be retaining the existing brands. The business comes with well developed processes, systems, an extensive client list and a very capable workforce who will continue to provide the same level of service that customers have come to expect.”

Whakatane-based Horizon is the eastern Bay of Plenty energy distribution company.

Attribution: Company release.

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