The Chinese buyer of Tasmanian dairy Van Diemen’s Land (VDL) will breathe new life into the company and the state’s north-west region, an agribusiness specialist has said.
Yesterday, a legal injunction blocking the sale of VDL to Chinese businessman Lu Xianfeng was thrown out, clearing the way for the sale to proceed.
Mr Lu is the head of Australia’s biggest blind maker, Kresta Holdings, and made his money in China selling seafood and sun shades.
He purchased the dairy company for $280 million including the payment of a $20 million non-refundable deposit.
Initially, he tried to keep his identity secret as the foreign buyer behind the VDL deal.
Melbourne investment banker David Williams said Mr Lu was a financial heavyweight capable of funding a major expansion of the dairy company.
“The Chinese have the deep pockets and depth of money to breathe new life into that property and, in my opinion, it’s really languished,” he said.
“I would be looking to double the size of the number of milkers on that property and take it from 18,000 milkers probably up to 40,000.
“At that sort of level it’s going to require very significant investment of probably a couple of hundred million dollars.
“I think it’s going to have enormous benefits for that region – not only in terms of employment but the ability for dairying around the VDL property to expand as well.”
Lu ‘told me he could bring in a million tourists’
Smithton real estate agent Betty Kay had dinner in Stanley with Lu Xianfeng, several weeks before it was announced he was the buyer of VDL.
She told the ABC’s 7.30 program Mr Lu had major plans for the area.
“What he could see was the opportunity for Circular Head with bringing more tourists in, he was [also] interested in the farms,” she said.
Mr Lu told Ms Kay he wanted to buy Smithton airport.
“I did mention that to the council at our workshop the next night,” she said.
“Mr Lu told me he could bring in a million tourists, and that would be just wonderful.”
TasFoods disappointed injunction failed
Yesterday a rival bidder, Australian company Tasfoods, lost a legal challenge in the Victorian Supreme Court.
TasFoods claimed the New Zealand owners of VDL breached a sales contract with it to buy the dairy company’s 25 farms.
Justice James Judd disagreed and threw out an injunction blocking the sale.
In response to the court’s verdict, TasFoods share price has plunged today and the company is now considering further legal options including whether to appeal or go straight to trial.
Tasfoods chairman Rob Woolley said he was disappointed the injunction was overturned.
“Its not the outcome I’d hoped for but it hasn’t undermined the case,” he said.
He said when a decision is taken on what next to do the first thing he will do is notify the stock exchange.
He said he was not concerned the TasFoods share price had dropped more than 30 per cent since the decision was made public.
“Earlier in the morning it was in the low 30s; we issued shares at 25 cents,” he said.
“If we struggle with the legal reasons [for the decision to end the injunction], the share market is going to have a lot of difficulty.”
Final hurdle facing Chinese buyer
Mr Williams said he was not surprised the court found the New Zealand owners were entitled to back out of the deal.
“The result was to be expected, the TasFoods guys are sophisticated investors themselves, so it was always likely,” the banker said.
“They went knowingly into a contract where one of the conditions was the New Zealanders had to approve it and they didn’t approve it.”
There is another hurdle facing Lu Xianfeng.
Before his purchase can go ahead it requires the approval of the Foreign Investment Review Board, which will assess it on national interest grounds.
Several weeks ago, the Turnbull Government blocked the sale of the Kidman cattle company to Chinese investors.
Tasmanian Independent MP Andrew Wilkie has called for the Government to reject the VDL sale, arguing the company is too strategically important to remain foreign owned.
He is planning to lobby the Nationals, including Agriculture Minister Barnaby Joyce, to support his position and pressure their Coalition colleagues.
“There is no doubt that the National Party agrees with me,” he said.
“Regrettably, I think I’m speaking for the Nationals, it’s about time the Nationals stood up for the country and stood up for country folk, because I have no doubt that a great many country folk are opposed to the proposition that the Chinese buy Van Diemen’s Land.”