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O’Reilly’s Independent Newspapers takes over Wilson and Horton Biggest story this month is the sale of the last remaining major newspaper owner in Aotearoa to overseas control. Wilson and Horton Ltd is now under the control of the Irish media company Independent Newspapers Plc (INP) and its owners, the O’Reilly family. Independent Newspapers and The O’Reilly Trust set up two 50/50 owned companies, Independent Press Ltd, and Independent Press Investments Ltd in order to buy 28.34% of Wilson and Horton for $292,741,554. They later raised their stake to 32.94% and declared an intention to raise it to 35% over the next six to twelve months. The O’Reilly family is headed by the same former rugby international Dr Tony O’Reilly who previously hit our screens as the CEO of H.J. Heinz and Company when it took over another national icon, Watties Ltd. The other principal news media owner in Aotearoa is Independent Newspapers Ltd (INL: similar name, but no more independent). INL is 49.7% owned and therefore controlled by the U.S.-based News Ltd empire of Rupert Murdoch. In total, it is 76% overseas owned and publishes about 70% of New Zealand’s newspapers, magazines and sporting publications. Between them, INL and Wilson and Horton in 1991 owned 65% of provincial press circulation and 90.5% of the metropolitan readership (Republican, no. 80, July 1993, “The political economy of communication”, by Wayne Hope). Wilson and Horton, in addition to its flagship, the New Zealand Herald, the biggest circulation newspaper in Aotearoa, owns eight other dailies: the Whangarei Northern Advocate, the Rotorua Daily Post, the Tauranga Bay of Plenty Times, the Napier Daily Telegraph, the Hastings Hawkes Bay Herald Tribune, the Levin Chronicle, the Wanganui Chronicle, and the Oamaru Mail. It also owns the Christchurch Star, the New Zealand Listener, the New Zealand Women’s Weekly, the community newspaper Whangarei Report, Bankprint, Comprint, Universal Business Directories, Shortland Publications, Security Plastics, and Couriers NZ. Overseas it has a U.S. subsidiary, Shortland U.S.A., operating in Denver Colorado. Almost symbolically, just days after the INP acquisition, Wilson and Horton announced it had bought the Northern Publishing Company, publishers of the community newspaper, the Whangarei Report, and of the Northern Advocate, one of the last independently owned newspapers in the country. The takeover by O’Reilly came courtesy of a raid by Brierley Investments Ltd (BIL) on Wilson and Horton’s shares in November 1994. The Brierleys shareholding was regarded as unfriendly by the Horton family – mainly for the good reason that Brierleys were the kiss of death when they owned the Auckland and Christchurch Stars. This gave BIL the position any mafioso would delight in, of being able to tell the Horton family to find another buyer or they’d be forced to make themselves at home. In the end Brierleys made around $70 million profit from the shares after holding them for just six months, though it left $53 million in as a loan to Independent Press. Various other newspaper groups had shown interest, including West Australian Newspapers, the Tribune Company (publishers of the Chicago Tribune), and Singapore Times Publishing, publisher of Straits Times. The Irish newspaper group’s shareholding was welcomed by the Horton family as a “white knight” and a “stimulus for change”. The Wilson and Horton families had about 20% of the company before the sale. However, bitterness remained. Deposed chairman, Peter Clapshaw criticised institutional shareholders for selling out to Brierleys, and managing director Michael Horton announced his retirement – though he was then offered a seat on the Board by the new master. Following announcement of the sale, the company announced a new policy of paying out a much increased 80% of after-tax earnings in dividends. Previously they had paid out only 40%. In part the increase was due to the fact that major capital work had been completed – for example a $100 million printing complex was opened recently. Also following the sale, other newspapers around the country felt it necessary to publish long, laudatory profiles of Tony O’Reilly himself. “Now O’Reilly runs for news” fawned the New Zealand Herald itself (8/5/95) and Wilson and Horton daily-turned-twice-weekly-giveaway the Christchurch Star (17/5/95), playing on his international rugby career. Wilson and Horton’s Listener had “The Irish answer” (15/7/95). “The charm of O’Reilly, ace of guys”, chimed in the rival INL-owned Press (20/5/95). O’Reilly put INP’s CEO, Liam Healy, in as chair of Wilson and Horton, confirming its controlling position. O’Reilly himself, his son Cameron, and INP group financial controller, Vincent Crowley, make up four out of eleven seats on the board – a situation criticised by small shareholders at the annual meeting of the company. O’Reilly interests, other than Heinz, include Argus Newspapers in South Africa, 43% of the London Independent and Independent on Sunday, 60% of the Irish press, and Australian Provincial Newspapers Ltd. O’Reilly himself sits on the board of the Washington Post. The interests extend to oil and gas exploration (Atlantic Resources) manufacturing, fertilisers, department stores, food and cars (FitzWilton Plc, an Irish conglomerate), fine glass and china (Waterford Wedgwood), and Irish “castles-cum-hotels” (Dromoland and Ashford). Reports the Listener: “After a 10-year court battle against what he calls ‘environmental lunacy’, he has just won planning permission to open an $100-million mine in Ireland, which will produce much of Europe’s zinc over the next 10 years.” With Sir Michael Fay he set up the Ireland Fund of New Zealand, a charity with branches in North America, Europe and Australia supporting “non-sectarian” projects in Ireland. The O’Reilly family trust is reportedly worth about $65 million. All of which leaves Aotearoa with desperately few independent voices in the mass news media other than in public radio. With the intertwining business interests of the owners of our main sources of news, and state TV dependent on corporate advertising, critical investigation of business activities or of pro-business government policies become decreasingly likely. (Ref: Press, “INL to sell Adams Print to News arm”, 11/5/93; “One-for-eight bonus as Wilhort has record half-year”, 6/11/93; “INL tipped to fall short of $48m target”, 18/8/94, p.37; “Dazzling move needed by BIL on Wil Hort sale”, 20/4/95, p.34; “Successful try for the ‘Herald’, 6/5/95, p.1; “WilHort sale price vindicates BIL faith”, 6/5/95, p.25, 27; “Horton happy with share sale”, 8/5/95, p.34; “Wilson and Horton buys ‘Northern Advocate’”, 9/5/95, p.42.; “O’Reilly aims to increase WilHort profit”, 3/6/95, p.28; “Irish shareholder increases WilHort stake”, 29/7/95, p.25; “WilHort head criticises institutions”, 28/7/95, p.16.) Huttons Kiwi sold to Japanese syndicate The buyout of household name, Huttons Kiwi Ltd, by a Japanese controlled syndicate, has ended in the stripping of the company of its familiar smallgood, ham and bacon products in order to give a $39 million cash handout to its new owners and turn it into a beef processing company closely tied to ANZCO. The syndicate is buying 57.08% of Huttons Kiwi, a public listed company, for $31,048,405. The syndicate consists of Itoham Foods Incorporated and Nippon Suisan Kaisha Ltd, both of Japan, Rangatira Ltd of Aotearoa, and “various employees” of Asian New Zealand Meat Company Ltd (ANZCO). At the time of the takeover, Huttons was a major food processor, making bacon, ham and smallgoods, with operations in the Waikato, Manawatu and Canterbury including the Riverlands group which owns three beef processing plants accounting for 7% of the national beef export kill. It was developing a pig farm in Canterbury. It had a 23.5% shareholding in ANZCO, which it was considering increasing to 30% early this year. The 57.08% being sold in this transaction was owned by Brierley Investments Ltd, and the members of the purchasing syndicate are all associated with ANZCO. Itoham will get 30.4% of Huttons, Nippon Suisan 10.1%, Rangatira 10.1%, and ANZCO management 6.5%. In March, Foreign and Colonial Management of the U.K. also had 6.95% of Huttons. In announcing the purchase in May, ANZCO’s managing director, Graeme Harrison, said the syndicate would also “seek to purchase all the shares in ANZCO and the New Zealand Casing group of companies.” ANZCO is 64.9% owned by the New Zealand Meat Producers’ Board. The syndicate would also sell back to Brierleys the core smallgoods business for $43.6 million (later increased to $45.22 million), retaining Riverlands. However the purchase of the Meat Board’s shares in ANZCO only eventuated in October (Press, “JANZ in Anzco”, 3/10/95, p.42; the transfer was to take place in December). It is not even clear that the Meat Board was consulted before the initial public announcement was made. Instead, Huttons announced a $39 million handout to shareholders in a return of capital financed by the sale of the smallgoods business to Brierleys, and renamed itself Pacific Beef. Rangatira is a private investment company based in Wellington. It gained its shareholding through a subsidiary, Romney (No 19). Rangatira’s board contains a group of major businessmen including Sir Roderick Weir (chair of Amuri Corporation and Sun Alliance Insurance), Norman Geary (chair of TVNZ and the Tourism Board; director of Cedenco Foods, Owens Group, and Amuri), and Murray Gough (former chief executive of the Dairy Board, director of ANZCO, AMP Society, and New Zealand Rural Properties). A private Auckland company, Green and McCahill, owns 10.02% of Huttons (Press, “Huttons stake bought”, 3/10/95, p.43). (Ref: Press, “Huttons Kiwi half trimmed”, 18/2/95, p.26; “Huttons stake cut”, 16/3/95, p.34; “Brierley to sell off Huttons Kiwi stake”, 27/5/95, p.2.; “Huttons approval”, 21/6/95, p.28; “Minority holders key for Huttons”, 31/5/95, p.31; “Rangatira shares switch at Huttons K”, 17/7/95, p.32; “Meat Board’s ANZCO stake in doubt”, 25/7/95, p.16; “Huttons to return $39 million on shares”, 2/8/95, p.26; “Huttons Kiwi gets nod”, 8/9/95, p.16.) Jumabhoy family of Singapore takes control of Noel Leeming One of the top appliance retailers in Aotearoa, Noel Leeming becomes Singapore controlled this month. Lion City Holdings Pte Ltd, a private company controlled by the Jumabhoy family of Singapore, received approval to buy up 100% of the issued share capital. The OIC records $16 million as the price paid for “approximately 38%“. However, the initial stake, bought as Leemings fought off a bid by the Brierley Investments controlled Skellerup Group, was reported to be 38.5% for $16.5 million, and a month after this deal went through Lion was reported to be increasing its stake. Lion City specialises in duty free and retail electronics. It is owned by Jumabhoy family controlled Scotts Holdings, which has property in Singapore, Britain, Australia, Thailand, Indonesia, Malaysia and India, and assets of $500 million. It had been unsuccessfully trying to buy an Australian duty-free chain when a merchant bank in Australia which Leemings had been working with on the Skellerup offer introduced it to Leemings. Reports the OIC: “Both Lion City and Noel Leeming are in the same business of appliance retailing. It is claimed that future growth opportunities exist in the Asian market. It is proposed that Lion City and Noel Leeming will pool their expertise and undertake a number of Asian joint venture operations.” However business analysts were more sceptical, one saying that home appliance retail stores are a “dime a dozen” in Asia (Foreign Control Watchdog, “Singapore investment in New Zealand”, August 1995, No 79, p.21-22; Press, “Lion City lifts Leeming stake”, 11/7/95, p.35). Apple Fields gets retrospective approval for 1,900 hectares of land acquisitions Apple Fields comes clean – and is rewarded with an open cheque. “The Commission has been advised that, unknown to Apple Fields, it and thus, the group, became an overseas person in March 1994 due to various small shareholdings having been acquired by various overseas persons. The granting of this consent regularises the transactions entered into by the group from the time it became an overseas person…” These transactions include a total of 1,938 hectares of rural land in Canterbury:
These will not be the total land holdings of Apple Fields: land owned but not shuffled in this period will not be registered here. On the other hand, it is possible the above includes some double counting of hectares. In addition, the approval covers “intercompany share transfers” and “acquisition of shares in existing companies”. The total consideration for all these transactions was “approximately $12,209,181“. The story of some of these investments, and particularly Rural Super Bonds, was told in our commentary on the January 1995 OIC decisions. The reaction of the OIC to this was not to take legal action against Apple Fields for breaching the Overseas Investment Act, but to give it retrospective approval and a complete exemption from the Overseas Investment Regulations. The exemption, granted in May 1995, was “on the basis that the group was totally New Zealand controlled at board level and that the majority of the voting power was held by New Zealanders”. Apple Fields is 28% owned by T/A Pacific Select Investments, a Cayman Islands Limited Partnership owned in the U.S.A., and 13.21% owned by various other overseas interests. Zuellig reorganises its Stevens KMS and CB Norwood subsidiaries The Zuellig Group of Switzerland is reorganising its subsidiaries to maximise its benefits from the privatisation of the health system. Subsidiary Stevens KMS Investments Ltd is taking control of CB Norwood Distributors Ltd. CB Norwood, a tractor distributor valued at $11,000,000, is already a subsidiary of Zuellig New Zealand Ltd, itself 76.1% owned by the Swiss company. Wahn Investments Ltd, a Swiss subsidiary of the group, is buying Stevens KMS Equities Ltd, another Zuellig New Zealand Ltd subsidiary, for $41,500,000. This latter sale has a twist to it because
So Zuellig is clearing the decks for action – to ensure that the creeping privatisation of the health system creeps its way. [Note: the OIC consistently and incorrectly spells “Zuellig” as “Zuelling”.] Avnet of U.S.A. buys VSI Electronics from U.K. firm Avnet Inc, a United States company is taking over VSI Electronics (NZ) Ltd for a suppressed amount. VSI was a subsidiary of Electron House Plc of the U.K. and is a distributor of electronic components and computer products. Avnet describes itself as “a world leader in the same business field”. Norton of U.S.A. takes over Artec Abrasives Nothing to do with motorbikes: U.S. company Norton is taking over the abrasives manufacturer Artec Abrasives New Zealand Ltd. Norton has a local subsidiary Norton New Zealand Ltd. It is setting up Norton New Zealand (Operations) Ltd, 70% owned by Norton New Zealand and 30% by Artec Holdings Ltd, which is taking over the assets of Norton New Zealand and Artec Abrasives New Zealand for $11,328,000. “Norton is also involved in the distribution of similar products”. General Reinsurance and Cologne Reinsurance merge The worldwide merger of the General Reinsurance and Cologne Reinsurance groups (U.S.A./Germany) has resulted in subsidiary General and Cologne Re Management Ltd acquiring the local business interests of the two groups for “in excess of $10 million”. The local companies formerly belonged to General Reinsurance Australasia Ltd and Cologne Reinsurance Company Ltd. “It is claimed that the merger will result in an enhanced product range and service being available to the New Zealand market.” Lincoln Road Shopping Centre, Henderson, sold to Australian mortgagee An Equiticorp Group shopping centre is being sold off to its mortgagee to meet the debt. The mortgagee was Farran (Nine) Ltd, a subsidiary of South Australia Asset Management Corporation of Australia, and the shopping centre is Lincoln Road Shopping Centre, Henderson, Auckland, owned by Lincoln Centre Ltd (in statutory management), an Equiticorp company. The shopping centre itself is just under four hectares, but an adjoining 3,732 square metres at 5 Moselle Avenue is also being acquired to preserve a right of way and make provision for expansion. The deal is valued at $14,350,000. Fijian buys remainder of company owning Auckland land for subdivision A company owned by Mr N Singh of Fiji who has permanent residency status in Aotearoa, is buying the remaining 76% of Anorco Number Forty Nine Ltd that he does not already own – for $76. His purchasing company is The Arsenal Trust. Anorco owns four hectares of land in Auckland which he intends to subdivide and build houses on. Brunei/Singapore company plans commercial development of Auckland land Cook Street Developments Ltd, owned by three residents of Brunei and Singapore, has approval to develop 3751 square metres of land “on the fringe of Auckland City” by building 66 commercial and retail shop units. The price is suppressed. Australian Gerard Industries buys Blue Point Products and Canterbury farm Gerard Holdings Pty Ltd, a subsidiary of private Australian company, Gerard Industries Pty Ltd, is buying an electrical distribution business, Blue Point Products Ltd, and a 2,271 hectare sheep and deer farm at Oxford, Canterbury for $7,000,000 from a consortium of Hong Kong residents. The farm is owned through the company Wharfdale Farming Company Ltd. “The proposal will enable Gerard through Blue Point’s electrical distribution business to control the distribution of their own products in New Zealand. The Commission is also advised that Gerard has expertise in the area of farming through its existing Australian operations.” Pacific Group of Singapore buys Farmers Building in Auckland Some familiar names are acquiring the Farmers Building in Auckland for $12 million for development. A company, Burtlea Investments No. 65 Ltd, is being set up to own the building. It is owned equally by the Symphony Group Ltd, Westmead Development Capital Ltd, and Grand Pacific Developments Ltd. Grand Pacific is owned by the Pacific Development Trust, “the beneficiaries of which are associated with Messrs Tan, Sy, Tang, and Pang of Singapore and Mr [George] Horsburgh of New Zealand”. Burtlea is buying Farmers Car Park Ltd in order to carry out the purchase. “It is proposed to redevelop the property to provide hotel/tourist accommodation, commercial and retail units and car parking.” Symphony is the “development manager” of the project, which will spend $50 million constructing a 200-room hotel and five-level retail centre on the 1.2 hectare site which borders onto Nelson, Hobson and Wyndham streets. Ironically – some would say cynically – behind Symphony are Colin Reynolds and Chris Minty, principals of the spectacularly unaerodynamic Chase Corporation, which took over the Farmers Trading Company in 1986 and crashed with a record loss in 1989, taking Farmers with them. As we have reported previously, Symphony is also involved in converting the old Government Building in Cathedral Square, Christchurch, into serviced apartments, and the Greenstone Lodge hotel development in Queenstown, as are the Pacific group (see March 1995 decisions). Horsburgh and Pacific have other things to occupy their minds just now: their Habitat Group was suspended from the Stock Exchange in mid-June for failing to meet its reporting deadline. The annual accounts when they did arrive had the auditor complaining that properties owned by the group had been overvalued. Correct valuation would show the company’s shareholders funds to be negative. As a result, Pacific Investments is now bailing out Habitat (of which it owns 54%) by buying its City Life apartments in The Terrace, Wellington at above valuation, and lending it $3.2 million. Otherwise Habitat would have had to call in a receiver. (Press, “Chase men buy Farmers site”, 1/7/95, p.24; “Properties overvalued in Habitat accounts”, 3/8/95, p.31; “Pacific makes fresh bid to salvage Habitat”, 17/8/95, p.31; Dominion, “Habitat to call receiver if sale plan fails”, 16/8/95, p.15.) Morton Estate, vineyard owner, sold to Coney family of Canada Morton Estate Ltd, of which Prudential Assurance Company Ltd of the U.K. owned “more than 25%”, is being sold to the Coney family of Canada. The family is sheltering behind the Morton Estate Wines Trust which is acquiring Morton Estate for a suppressed amount. Morton Estate owns 138 hectares of land in Hawkes Bay, 41 hectares in Marlborough, and 0.36 hectares at Katikati, Bay of Plenty. J. Coney says he has U.S., Canadian and Australian market contacts. Morton Estate ended up in Prudential’s hands when a sale to Appellation Vineyards fell through: see our analysis of the October 1994 decisions. Korean transnational prayer/retreat centre acquires 12 ha. land at Akaroa Transnational prayer/retreat centres are the latest investors. Mrs Gye Hwa Kim of Korea “who has established and manages 41 prayer/retreat centres through Korea and the United States” has taken over Hallelujah Holdings Ltd which owns 12 hectares of land at Akaroa, Canterbury. She is not paying for it: she is acquiring all the shares in the company in exchange for a $580,000 loan she has advanced to it. The property is used by the Hallelujah Trust, whose trustees are Messrs Ohn and Song of Christchurch, for the purpose of “promoting, developing and encouraging the Christian religion within New Zealand”. Mrs Kim loaned Hallelujah Holdings the money for it to purchase the property originally and has “become actively involved in the operation of the centre.” The purpose of the application to the OIC is “acquisition of land for other purposes”. Carter Holt buys forestry rights in Waikato, Taranaki, and Bay of Plenty Carter Holt Harvey Forests Ltd, “ultimately approximately 51% owned by International Paper Products of the U.S.A.“, is buying up forestry rights to a number of small areas of land in the Waikato, Taranaki and Bay of Plenty. This is particularly interesting because the OIC informs CAFCA that Carter Holts, which the OIC had formerly granted an exemption from the Overseas Investment Regulations because the OIC regarded it as New Zealand controlled, had the exemption revoked on 2 May 1995 due to the controlling interest taken in it by International Paper Products. So the Carter Holt Harvey name is now appearing amongst the decisions of the Commission as predator rather than victim. The present deals are:
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