Shanghai Maling gains OIO approval to buy 50% of Silver Fern Farms

Chinese firm Shanghai Maling's application to buy a 50% stake in Silver Fern Farms has been approved by the Overseas Investment Office.

The decision, announced by Land Information Minister Louise Upston and Associate Finance Minister Paula Bennett, includes that rationale that:

SFF has been, and continues to be, operationally constrained by a high level of debt. The Investment is expected to result in SFF reducing its debt to nil and having cash reserves. This will allow SFF to invest in and improve the efficiency of its plant network as well as advance its value-added strategy.

To enable SFF to gain a greater presence in China, the Applicant will assist it with product development, market research, Government approvals and access to relevant e-commerce sites and 2,000 retail stores over a period of 3 years. The Applicant and SFF are currently working to create a range of retail beef and lamb products specifically for China that are processed and packaged in New Zealand.

OIO approval for the $261 million deal was first sought in October last year, and had been slated to go unconditional by June 30 but delays in the approval process saw the companies agree to a revised date of September 30. The deal would enable Silver Fern to repay its debt, removing a threat from its banking syndicate to withdraw support. It would also enable it to tap Shanghai Maling's supply chain and parent Bright Food's wholesale and retail networks to distribute into China.

Silver Fern Farm shareholders reaffirmed their support for the sale at a meeting last month, which was called by a group of farmer-shareholders opposed to the deal.

The deal attracted opposition from some of the cooperative's shareholders who forced a second special meeting and gained political backing from NZ First leader Winston Peters, though directors said the vote wasn't binding and wouldn't change their mind.

Ms Upston and Mrs Bennett turned down an application last year by Chinese investor Shanghai Pengxin to buy the iconic Lochinver Station, a central North Island property.

ACT leader David Seymour maintains Mr Peters' opposition to the deal is misguided.

“It’s disturbing that Winston Peters, who could potentially hold the balance of power after the election, would override the recommendation of the Overseas Investment Office and block the partial sale of a private company,” the Epsom MP says.

“What’s Mr Peters so afraid of? Does he think the cows will literally get shipped off to China? That the land itself will disappear? He’s just stirring up more anti-Chinese sentiment for cheap political gain.

“Blocking this sale would have prevented an injection of cash into the New Zealand economy, and would send a message to businesses that private property rights are not respected in this country.”

Click 'Play' above to listen to Mr Peters' response.