Government Policy On Overseas Bids

Press, Volume CVI, Issue 31107, 9 July 1966, Page 1

Government Policy On Overseas Bids

(New Zealand Press Association)

WELLINGTON, July 8.

The Government would intervene only when it appeared clear that a proposed take-over by overseas interests would be contrary to the public interest, the Minister of Finance (Mr Lake) said today.

It was the Government’s policy to encourage overseas investment in New Zealand whenever it aided the development of the economy, he said.

“The options available to us are the choice between a slow rate of economic growth by developing our economy entirely out of our own resources or of aiming at a higher growth rate by encouraging overseas residents with capital and knowledge to invest in this country’s future,” said Mr Lake.

“The Overseas Take-overs Regulations were to be administered in a way which would minimise Government interference with normal business transactions.

"That this intention has been put into practice is shown that in 98 take-over offers registered with the Reserve Bank, all except two have been approved in the form in which they were submitted.”

One of the two bids rejected was approved subject to provision for eventual New Zealand participation in the equity capital. The other was approved on the basis of a modified offer which would leave control in New Zealand hands.

Of the 98 take-over offers registered, 21 involved 50 per cent or less of the shareholding and in 63 instances the consideration was less than £40.000. Forty-two offers involved

one-man or family businesses where the principal wished to sell because of advanced age, illness or lack of capital for expansion.

“In most cases of this kind, the overseas company was the only logical buyer because of long-standing connexions which existed between it and the New Zealand company which was being sold,” said Mr Lake. “Nearly half the offers registered were covered by the regulations, largely for technical reasons. Twenty-seven offers amounted to no more than reorganisation within overseas-controlled companies; 19 involved offers by companies which, though controlled in New Zealand, have more than 25 per cent of the ordinary share capital owned by overseas residents. “In these two classes, registration is largely a formality. It enables the Government to keep in touch with

developments and to intervene if there seems to be any danger of monopoly.”