Jiajiayue Group ties investment in Cooks Global Foods to OIO approval for farm purchase
By Fiona Rotherham
Sept. 30 (BusinessDesk) - Jiajiayue Group's $4.5 million investment in NZAX-listed Cooks Global Foods is conditional on
the Chinese supermarket chain gaining Overseas Investment Commission approval for the purchase of a sheep and beef farm
in New Zealand.
Cooks, which is the franchisor of Esquires Coffee Houses outside of New Zealand and Australia, said in a statement today
that it had formal commitment for the $4.5 million investment from the Chinese firm and $4.5 million from a group of
strategic investors headed by executive chairman Keith Jackson. The group, which includes existing Cooks shareholder
Yunnan Metropolitan Construction and Investment Co, will invest through a special purpose vehicle, Cooks Investment
At yesterday’s annual general meeting in Auckland, Jackson said a date has yet to be set for a special meeting to be
held before the end of October for shareholders to vote on the shareholding rejig, which involves selling 70.3 million
shares at 12.8 cents apiece to Jiajiayue Group and the Jackson's group of investors. They will jointly acquire the 40
percent stake held by Esquires New Zealand founders Stuart and Lewis Deeks, who are exiting the company, at 5 cents a
share, or a total cost of $6.8 million.
Once the transaction is completed, Jiajiayue Group will own 25 percent of Cooks and Jackson’s consortium 35 percent.
Jackson told shareholders a further $9 million will be raised in a public offer in October at the same or a similar
price to that paid by Jiajiayue Group
But Jiajiayue Group, which is a supermarket chain with integrated agriculture products processing, wholesaling,
retailing and logistics distribution, has said it will back out of the capital raising if it doesn’t get OIO approval to
purchase a 600 hectare sheep and beef farm in Port Waikato.
While the two purchases are not linked, the statement said “understandably, JJY is linking these together as comprising
its total New Zealand investment”. An OIO decision on the farm purchase is expected “imminently”.
The government’s decision earlier this month to reject a bid by the Chinese-owned Pure 100 to buy Lochinver Station has
raised renewed doubts with offshore investors about the country’s foreign investment rules, despite Prime Minister John
Key saying it doesn’t send mixed messages.
Although the OIO recommended the application from the Shanghai Pengxin subsidiary to buy Lochinver be approved,
government ministers rejected it on the basis there was not enough benefit to New Zealand.
Jackson said the Lochinver Station decision gained a “lot of publicity in China” and Jiajiayue Group was asking what the
implications were. He said the amount of the farm investment is similar to that Jiajiayue Group intends making in Cooks.
The Chinese company intends building a lodge on the farm to which it will send supermarket staff to learn more about the
quality of the New Zealand sheep meat it imports and sells to customers.
If Jiajiayue Group goes ahead with its investment in Cooks, it will be able to nominate one director on the board, as
will the consortium. Jackson said yesterday the company was looking to appoint two new independent directors ahead of a
potential listing on the new NXT market.
The thinly-traded Cooks' shares last traded on the NZ Alternative Market at 12.5 cents.