Haier wants OIO approval for F&P bid

UPDATE 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."

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.