Shanghai Maling confident over deal

Rob Hewett (front, with CEO Dean Hamilton) says the firm's workforce should rise as a result of the deal. Photo / NZME

New Zealand's biggest meat processor, Silver Fern Farms, and its Chinese partner, Shanghai Maling Aquarius, are confident their new joint venture will not go the same way as the Lochinver station purchase, which the Government blocked this month.

Cabinet Ministers Paula Bennett and Louise Upston turned down Shanghai Pengxin's $88 million purchase of the station, near Taupo, saying the transaction did not create enough economic upside for New Zealand.

But Shanghai Maling's president, Shen Wi ping, and Silver Fern Farms chairman Rob Hewett, said they were confident their $261 million deal to form a 50/50 joint venture would get across the line.

The deal is subject to a Silver Fern special general meeting scheduled for October 16 in Dunedin.

It is also subject to Overseas Investment Commission and Chinese regulatory approval.

Shen, in an interview with the Herald at Silver Fern's headquarters in Dunedin, said Shanghai Maling - the only red meat specialist in the wider Bright Foods group - had been looking for overseas partners.

Chinese consumers saw New Zealand as a producer of high-quality food, and the company was attracted by Silver Fern's "plate to pasture" value-added strategy, Shen said.

"Shanghai Maling's investment philosophy is for both parties to have mutual benefit from the potential co-operation, which means Shanghai Maling wants to fully leverage the companies' management teams to develop their current [value added] strategy," he said.

"Shanghai Maling can add some new markets to existing opportunities."

Shen said he was confident that the deal would not go the same way as Shanghai Pengxin's deal with the Stevenson group over the Lochinver station.

"We are very certain that our case is very different from theirs," Shen said.

"First, Shanghai Maling is a key player in the red meat market sector in China, so we are strategic players."

"We know this industry very well and we know this market."

"The second thing is that we will inject a significant amount of money into this business to make it grow.

"Given that we have such a big market penetration in China, we are very confident that Chinese red meat markets, particularly beef and lamb, will grow quickly."

Silver Fern Farms, with its 100 per cent New Zealand product, would be well recognised in China through Shanghai Maling's strong distribution network, Shen said.

Chairman Rob Hewett said life for the company's 7000 or so employees would not change.

The workforce was likely to rise as a result of the deal.

"Access to China will be enhanced materially, through our partnership," he said.

"It is the best sort of investment for New Zealand.

"The production stays here. The revenue opportunities come back, and the parties share it."

Hewett said just 5 per cent of Silver Fern's turnover is in value-added product "and we know we can do better than that".

Management have conducted five meetings with supplier shareholders already and has 22 more to go.

Hewett said the feedback from farmer-shareholders so far was positive.

"The uptake has been positive and I don't see any problems about getting this shareholder vote concluded," he said.

"In Silver Fern Farms' history, there has never been this kind of investment, and I doubt whether there has been one like it - in one chunk - for the industry," he said.

About three-quarters of Silver Fern's volume is provided by its shareholders.

Jamie Gray travelled to Dunedin courtesy of Silver Fern Farms.