By Paddy Hintz, Senior Media and Communications Consultant
One of the world’s largest food providers – the China-based Yili Group – recently turned to the SAS Group for advice and support in its acquisition of a major New Zealand dairy co-op. The communications and regulatory challenges were complex, and the transaction occurred in an emotionally charged environment. So why did a large Chinese firm looking to do business in New Zealand turn to Australia to help make it happen?
The answer may lie in the unique experience within the SAS Group, particularly its China division, whose body of work has gained a trusted international reputation in navigating often sensitive political, media, legal and business environments made more complex by language and cultural barriers.
Yili, the No. 1 dairy producer in China and one of the world’s largest food brands, engaged the SAS Group to support its recent successful acquisition of Westland Dairy. Its purchase of Westland, together with its previous venture in Oceania Dairy over the past five years, amounts to a $1.2 billion investment to gain access to enough quality milk to supply its growing international markets.
To succeed, Yili’s purchase needed to navigate a highly regulated transaction process made more complex by widespread political, community and industry opposition to the sale.
Westland is a dairy co-operative established by shareholder farmers in 1937 on the West Coast of New Zealand. Its shareholders are proud and parochial. When the New Zealand Dairy Board was abandoned in 2001, Westland farmers decided to go on their own, rather than accept an offer to join New Zealand’s own international dairy giant, Fonterra, another co-op.
In order for Yili’s offer for Westland to be approved, Yili and the Westland Board needed to convince a large majority of farmers to sell their shares to Yili. The sale was also subject to Overseas Investment Office (OIO) and High Court approval.
Yili’s terms amounted to an extremely generous cash offer providing farmers with a 10-year guarantee to purchase their milk, regardless of how remote their location.
Despite this, a large number of voices opposed the demise of the co-op model. Others did not want a major New Zealand asset, the West Coast’s largest employer, falling into foreign hands.
These views were also held by New Zealand’s Agriculture Minister, a member of a West Coast dairying family, and members of the Coalition partner in the New Zealand Government, New Zealand First.
The sale process was made even more challenging because it required negotiations across multiple stakeholders within Westland and Yili, and their respective legal and financial teams. In New Zealand, few stakeholders spoke Mandarin. In China, few of the Yili team spoke English.
These teams had to navigate a sale process in a strict regulatory environment overseen by the Overseas Investment Office (OIO) and the High Court.
The SAS Group’s role was to leverage its combined expertise and provide sensitive and timely advice about government relations, media, business communications and business strategy within this complex framework of multiple stakeholders used to operating in different business, political and cultural environments and in different languages.
By representing Yili through this process, the SAS Group’s team was able to create a smoother pathway for the various stakeholders involved in the transaction.
Despite high-profile opposition, the sale was overwhelmingly supported by Westland’s farmers, approved by the OIO, and allowed by the High Court.
The SAS Group also helped Yili celebrate the achievement with a transaction ceremony attended by diplomats, trade figures, industry representatives and global media in Auckland, as well as supporting Yili’s introduction to staff at Westland’s Hokitika plant on the West Coast.
Combined with its previous investment in Oceania Dairy, the successful transaction gives Yili access to a milk supply and production large enough to create a high-end New Zealand-based brand selling direct to discerning consumers globally.
Yili – and the media covering the transaction ceremony – have called it the Dairy Silk Road, with the Westland sale creating a trade bridge between China and New Zealand.
For Westland and the West Coast of New Zealand, the successful acquisition means the viability of a proud dairying tradition on the West Coast has been secured, while farmers, the community and even the banks underpinning farmers’ loans will be in a lot better position economically.
For the SAS Group, it’s validation that our demonstrated ability to navigate complex regulatory and public affairs environments, our capacity for clear, bilingual communication, our results-oriented focus and the creation of trusted relationships will always bring the right result.