Haier wants OIO approval for F&P bid
"Kiwi companies exceed in so many inventive ideas and innovations but the country just fails on delivery due to a raft of reasons."
Featured commentUPDATE 5.45pm: The government confirms Chinese state-owned whiteware giant, Haier, has applied for approval to take over Fisher & Paykel Appliances.
Haier, effectively a 37.46% F&P shareholder after an agreement with Australian fund manager Allan Gray, wants to acquire 100% of the company.
It needs approval under the Overseas Investment Act 2005 because the proposed acquisition involves significant business assets of more than $100 million.
Brian Usherwood, Land Information New Zealand's general manager of crown property and investment, says: "We can confirm that the Overseas Investment Office has now received an application for consent from Haier in relation to Fisher and Paykel Appliances Limited."
F&P shares (NZX: FPA) are up 12.5 cents today to $1.165, on trading of more than 15.6 million shares - more than 2% of issued shares.
The company's market value is $843 million.
Forsyth Barr analyst Andrew Harvey-Green says the share price hasn't reached Haier's $1.20 offer price because the takeover bid would take a couple of months to complete.
"The people on the buy side are going to be those who think there's more to come in the offer - that this is just the opening gambit from Haier and that we could see some more - versus those who see it as a risk that it may fall over and they want to take their money now and get the cash in the hand.
"Shareholders will be hoping there's more to come."He says the relatively few conditions in Haier's offer shows how serious the company is about acquiring 100% of the shares.
3pm: Haier's conditional promise to keep Fisher & Paykel Appliances in New Zealand has done nothing to allay union fears of a Kiwi manufacturing shutdown.
EPMU national secretary Bill Newson says he has "well grounded" concerns the Chinese whiteware giant will, over time, take F&P manufacturing offshore - and nothing he has seen from Haier convinces him that won't be the case.
"We do hear a lot of reassuring noises around the design capacity being valued in New Zealand, but we don't hear a lot of reassuring noises about the high quality work that actually goes in, in the manufacturing side in New Zealand.
"It's not a long bow for us to draw, to be concerned we will lose all production at Fisher & Paykel.
"That would just be a disaster."
Haier, which already had a 20% stake in F&P, is making a bid to take over 100% of F&P shares.
Its $1.20 offer has already persuaded the second-largest shareholder, Australian fund manager Allan Gray.
F&P shares (NZX: FPA) are up 13 cents today to $1.17, on turnover of more than 12.8 million shares.
F&P Appliances' market value has increased from $543 million on Monday morning - before the takeover bid was announced - to about $850 million today.
Long-term preference
Speaking through an interpreter, director of Haier and president of Haier White Goods Group Liang Haishan says if its takeover bid is successful, the company's long-term preference is to keep F&P's "innovation capability" in New Zealand.
"There will be no redundancies or closure of facilities as a direct result of the proposed offer.
"If the transaction is successful, Haier's intention is to support the investment in the product development capabilities and Haier hopes it becomes a New Zealand-based global centre for excellence for research."
However, in the press conference's preamble in Auckland, John Walsh, general manager for Acumen Republic, Haier's spin doctors, said Mr Liang's comments related to the proposed offer and it reserves the right to make changes to those intentions, after consulting F&P's board.
Mr Liang says Haier's intention is to acquire 100% of the shares but its minimum take-up is 50%.
"We feel comfortable to position that anywhere between more than 50% to 100%."
Mr Liang did not rule out closing the Auckland manufacturing plant but said it was the company's intention, if the takeover is successful, to run F&P as a stand-alone company and it supports the current board's strategy.
Manufacturing future at stake
The board said last month all its manufacturing facilities, including Auckland, were being reviewed.
In July, Mr Newson was lamenting the loss of 29 jobs at F&P's Auckland factory, as one of the company's fridge lines was moved to Thailand.
However, with Haier's potential takeover and the signalled manufacturing review, he believes the entire plant's future is at stake - risking between 250 and 300 jobs.
He says there's little the union can do until the takeover bid is completed, but "by then, often, the horse has bolted."
"We do have a very real concern that it translates into the loss of production in New Zealand."
He says F&P's manufacturing closure could dilute the country's ability to drive high-end manufacturing innovation.
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Comments and questions38
A "conditional promise" is right up there with an "unqualified, maybe".
I'm not overly fussed on what Haiers plans are for F&P.
I have an enormous loyalty to the brand and consider for example their dishdrawer dishwasher the single most best designed and user friendly appliance in the world bar none. The problem was that F&P lacked the clout that the big internationals can muster and isn't that the case for darned near everything. Kiwi companies exceed in so many inventive ideas and innovations but the country just fails on delivery due to a raft of reasons the first being that we are just off the coast of Antarctica and our closest continent of importance Australia would far rather invest in Tasmania. I doubt if a kiwi invented the cellphone we could have ever created something like Nokia.
Didn't a Kiwi invent or make pratical the radio telephone?
F&P was once, many many years ago, a trusted and respected brand. Its products today are rubbish with planned obsolescence a big part of their business model. It was a poorly managed and weakened by a heavy debt load which caused it to fall into stronger Chinese hands. A good example of real capitalism at work. The weak are replaced by the strong. The Chinese might make it work, but I wouldn't count on it.
Economic empire building continues as ours languishes
Because new Zealanders spend too much time fighting over what they have, rather than what they can have - as a people.
Wind claims, anyone?
The deep rot that socialism has fostered in our schools, TV culture, radio, newspapers and etc is bearing it's predictable fruit.
Ironically, we are being taken over by the bigger socialists ....
That is a very strange comment
A strange apostrophe too.
Anyone want to rerun that debate about how to protect our IP?
NZ is still a relatively immature country, and in general this shows in the people.
They build houses for their egos, rather than function, is a classic example of this.
The only ones that appear to have shown some level of maturity has been generational farming, and those that understand the long term value of retaining quality assets.
Lets hope most dont get fooled by Fonterra, and their share give away. While bulk commodity prices have been high, its hidden the poor quality of their management. Its only a matter of time before demand gets swamped by lower cost suppliers, when they should have been purchasing up global brands; to create vertical intergration.
Lets hope the new CE is better, because Fonterra does not have the structure to develop end products from the ground up. Small local dairy companies do, which ironically NZ once was.
Maybe the issue is not mgmt but the board who are represented by the generational farmers you speak so highly of? They can not see past their traditional methods of practice.
Lets face it mgmt only act on strategic intent set by a board.
You're probably right.
Conned by Norgate and others into aggregating production, which has produced little more than high powered salaries for management & board members.
Small businesses, which most dairy suppliers were, is where value added products stem from; not big business. They just buy them off, to control the market.
These small businesses are what drive small communities, rather than the elite few.
The result of this aggregation is wasted rural infrastructure and broken communities, all for short term profit.
Big business is bad for everything but profit, and its time the majority woke up to this fact. Not everyone live on profit and cant.
Oil at $US200+/barrel is on the horizon and this may spell the end of Fonterra.
Expect to see a reconfiguration of the plastic trays, to allow for rice bowls, big dishes and chopsticks
If Managemnt had not made such bad decision making a few years ago and loaded the company up with debt this whole saga would never had happened and Fisher & paykel would be a far better company in a far better position today
I think what you'll find is that previous management loaded up the company with debt to pay for the construction of offshore manufacturing in Thailand and Mexico knowing they had to move to lower cost production to maintain margins. Unfortunately their timing was off as it coincided with the GFC and it has taken until recently to bed in those production changes and get a return on the strategy.
Under Haier majority ownership its likely at least half of FPA will stay a NZ business - it's odds on FPA Finance will get spun off
No, Bongard and Co went silly and purchased Elba (NZD $160M) and DCS (NZD $35M) and then proceeded to borrow further to pay out dividends.
Their debt position had more to do ambitions to be a bigger company than they were capable of than it had to do with moving production to Mexico and Thailand. Heck, they bought Elba for $160M! A company whose facilities they still use in some capacity in Italy to make part of their cooking range (i.e. so much for that whole spending to cut costs). Madness.
And now Bongard's part of Tourism Holdings' board, who are going on a spree of M&A's. Only a matter of time before they fall over.
Previous management scr*wed the company
"Speaking through an interpreter, director of Haier and president of Haier White Goods Group Liang Haishan says if its takeover bid is successful, the company's long-term preference is to keep F&P's "innovation capability" in New Zealand."
Take that with a pinch of salt and a cup of soya sauce.
License the IP. Time and time again NZers(tech companies) think they can do it all and be successful !! Then when they get in a hole they're forced to sell !!
Another case of New Zealanders putting their money into unproductive rental properties and not into companies that produce jobs growth.
We can thank the Government / Reserve bank for this culture with their tax policies.
Your comment is stupid and shows no understanding of the issues. Tax policies and the exchange rate have nothing to do with the possible takeover of F&P Appliances by Haier.
High and volatile exchange rates cripple exports. Unfavorable tax policies make NZ uncompetitive. F&P has been badly affected by both - talk to Mr Paykel about his debates with Treasury over the years. For the sake of $15m tax differential, F&P had to site a new manufacturing plant overseas - meaning NZ lose out on hundreds of jobs and tens of millions of taxes.
I see you are still trying to justify Don Brash's monetary policies in 1997 to 1999 which pushed NZ into the only double dip recession in the OECD at that time. Only an idiot would keep interest rates high when everybody else was cutting theirs and shows how stupid Don and the Board (including you) were at that time.
Every F&P product I've owned has been rubbish. That said I am saddened that we are losing control of another innovator to overseas interests.
The big question now is how will the new F&P Haier entity work?
You must be the unluckiest sod in the land. Every F & P appliance I've had has performed admirably. You're not my ex broker are you?
Purchased a Haier dryer 3 months ago. After 1 week the timer had to be replaced. After 3 months the motor required replacement.
And you got replacements?
Was that a haier drier or a clothes drier ???????
Oops pushed wrong key. In addition to above it produces enough lint to knit a jersey and is so noisy I had to relocate it to an outside garage. The F and P model it replaced lasted nearly 20 years and simply became BER. Enough said.
Was exposed to F&P appliances whilst moving round in between building permanent house. All rubbish. Am now F&P free! Everything now works properly.
You will be an exception.
FAP has always been consistently reliable and that's why it's the #1 selling brand in Australia.
Miele, Smeg, Bosch etc are more reliable than F &P.
And a bloody sight more expensive!!
So? You get what you pay for. During our period of renting we had dishdrawers (didn't wash properly, didn't dry properly and needed a seviceman each month to fix leaks et al). Washing machine simply flogged the guts out of clothes for a short time as the way to wash them. Ruined delicate items and didn't wash very effectively anyway. It didn't even have a water heater in it!! Fridge caused food (vegetables) to rot in a day or so (current non F&P one vegetables can last for a month at least and more).
Most appliances these days have an in-built failure date so you'll go and buy a new one. Several decades ago you paid a lot and got a machine that would last a couple of decades without missing a beat. Maybe this drawn out correction that is taking place primarily in the Anglophone world will force people to get off the hedonic treadmill and start demanding quality and paying for it instead of doing the opposite.
Whoops! I meant "consumption treadmill".
It is a given: if Haier takes over, the best we can hope for is that they maintain R&D here, but the manufacturing and assembly factories wil be in China. You would be naive to think otherwise.