Dakang chief executive Gary Romano says the decision to cancel was partly based on the government's decision to veto Pengxin's purchase of Lochinver Station last month.
Duncan Bridgeman talks about Dakang's cancellation of a Northland Farm purcha
A Chinese company has withdrawn from an agreement to buy 10 farms in Northland for about $42.7 million, citing delays and uncertainty from the government’s Overseas Investment Office.
Dakang New Zealand Farm Group, which is 55% owned by Shanghai Pengxin, this morning confirmed the deal was off.
The company had signed a sale and purchase agreement to buy seven dairy farms and three support farms in the Mangakahia Valley district just south of Kaikohe from Mervyn and Cara Pinny.
Dakang [SZ:002505] chief executive Gary Romano says the decision to cancel was partly based on the government’s decision to veto Pengxin’s purchase of Lochinver Station last month.
“We lodged an application with the Overseas Investment Office (OIO) in April 2015 believing five months would be sufficient time to enable a rigorous and objective review of our plans for the farms, compared to the 70 working day guideline the OIO has for turning around applications,” Mr Romano says.
“However, to date we have had not received any advice that the OIO has considered the sale and/or made a recommendation to the ministers.
“Our decision to end the agreement is somewhat based on our experience with Lochinver where the sale and purchase agreement had to be extended 11 times, each extension causing frustration and pain to the vendors, and uncertainty for everyone involved.
“We simply are not confident enough of a favourable outcome to warrant putting the Northland vendors through a similar experience.”
Dakang announced the deal to the Shenzhen stock exchange in April and lodged a new application with the OIO alongside the Lochinver application.
At the time Mr Romano told NBR Online the acquisition demonstrated the company’s commitment to invest in dairy, in spite of a low payout forecast from Fonterra [NZX:FCG].
“It’s another case of us wanting to develop what we’ve identified as an under-capitalised set of farms, while also adding some environmental benefits.”
Today, Mr Romano said: “The purchase of the farms and significant further investment would have had a positive impact on both the local and wider New Zealand communities and we are very disappointed that this will now not happen.”
The Pinny deal involved 3300ha of land and 3900 cows.
Dakang wants to acquire Shanghai Pengxin’s New Zealand farm assets, including Crafar Farm Holdings, which it bought out of receivership three years ago.
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