JBS gets OIO approval to take majority stake in Scott Technology

Wednesday 30th March 2016

Brazilian meat processor JBS has been granted Overseas Investment Office approval to take a majority stake in Scott Technology, ending a process that dragged on for more than six months.

Dunedin-based Scott today said its scheme of arrangement with JBS Australia had been signed off by the OIO, paving the way for High Court approval which is expected to be granted in two weeks. The OIO application was first filed on Sept. 17 last year and was initially expected to be completed in December.

The sticking point was over the Kaikorai Stream, which passes through the company's Dunedin property and is classified as reserve land under the city's proposed district plan, leading to the OIO seeking more information from both Scott and JBS.

The JBS deal was first floated in August last year in a transaction that would inject new capital into Scott's industrial automation manufacturing business, which its existing shareholder base was reluctant to do. The merger was overwhelmingly supported by shareholders, and once ratified by the courts will provide Scott with $41 million of new capital.

The OIO's processes have come under scrutiny over the past year after a drawn-out decision approving the sale of Lochinver Station to Shanghai Pengxin was overruled by Associate Finance Minister Paula Bennett and Land Information Minister Louise Upston, who weren't convinced the deal offered New Zealand enough benefits.

Pengxin had already gone through a significant delay buying the Crafar family farms in 2012 when rival bidders fronted by corporate raider Michael Fay took the case to the Supreme Court. While the country's higher court ultimately sided with Pengxin a High Court judgment meant the OIO required greater analysis of the economic benefit of foreign investment.

The Crafar farms became a touchstone for anti-foreign ownership sentiment after the OIO turned down an earlier bid in 2010. Prior to that, the then-newly appointed National-led government was keen on relaxing restrictions on foreign investment but quickly resiled from that stance during a review of the law that ultimately led to more controls being placed on overseas owners.

(BusinessDesk)

BusinessDesk.co.nz

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