Tuesday 16th July 2019
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The Overseas Investment Office has approved Inner Mongolia Yili Industrial Group’s purchase of Westland Co-operative Dairy Group, after finding Yili has the relevant business experience and has shown financial commitment.
The $588 million deal to sell the co-operative for $3.41 a share is now closer to completion having received shareholder approval earlier this month. The transaction now needs High Court approval, which is expected this week.
The OIO said in a statement that Yili - which already owns Oceania Dairy - wanted to extend its kiwi operations and improve its access to high-quality products. Westland employs 573 people in New Zealand and exports about 90 percent of its products.
OIO approval was required because the transaction value exceeds $100 million and because Westland owned two milk processing plants in Hokitika and Rolleston and about 4.8 hectares of land near those factories were deemed sensitive.
Yili told the regulator the use of that land would not change and will be used as a noise buffer or for worker accommodation.
The Chinese dairy giant, which has been operating locally since 2013, did not have to prove New Zealand would benefit from the sale, because it did not involve the purchase of rural land.
Former Westland shareholders had asked the OIO to hold Yili’s application until they received payment for shares they had surrendered when they left the co-operative. The OIO, however, said this was not an issue it could take into account and was instead a commercial issue for the former shareholders to resolve with the new Westland owners.
Current shareholders in Westland will bank on average $572,000 when the deal goes ahead, ANZ Bank New Zealand has said previously. Even if a large share of those funds were used to repay debt, it estimated the multiplier effect of the sale would boost the local economy to the tune of about $280 million.
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