One of Japan’s two largest meat processing and marketing companies, Itoham Yonekyu Holdings, has received Overseas Investment Office (OIO) consent to increase its shareholding in ANZCO Foods from 65 percent to 100 percent. It will acquire the shares currently held by ANZCO’s management (18.24 percent) and Japanese food company Nissui (16.76 percent) as a carefully planned transition which will see founder and chairman, Sir Graeme Harrison, retire at the company’s AGM in March.
In 2016, ANZCO was New Zealand’s fifth largest exporter and second largest meat-industry related business with an annual turnover of $1.45 billion. The company has 3,000 employees, mainly in regional New Zealand and a network of eight offshore offices.
Currently, ANZCO is 82.35 percent overseas owned. The increase in Itoham Yonekyu’s shareholding will come from the purchase of all shares now held by Nippon Suisan Kaisha Ltd (Nissui) and ANZCO Foods directors and management. Nissui holds 16.76 percent of the shares while the chairman of ANZCO Foods, Sir Graeme Harrison, and management have 18.24 percent.
In April 2016, Itoham Foods Inc became a wholly-owned subsidiary of Itoham Yonekyo Holdings Inc. Itoham Yonekyu was created as a vehicle for the merger of the businesses of Itoham Foods and Yonekyu Corporations, which at the time of the merger were the second and seventh largest meat processing and marketing companies in Japan.
Itoham Foods’ association with ANZCO Foods dates back to 1989 when the two companies formed a 50/50 partnership that resulted in the establishment of Five Star Beef Ltd and the construction of New Zealand’s only large-scale beef cattle feedlot in Mid-Canterbury.
Itoham Foods joined a management-led buyout of the then New Zealand Meat Producers’ Board shareholding in ANZCO Foods in 1995 and held a minority 48 percent until 2015 when it increased its position to 65 percent.
The change in ANZCO Foods ownership will complete a planned succession process for the business. The founder and current chairman, Sir Graeme Harrison signalled his impending retirement in 2015. He will now do so at the next ANZCO Foods general meeting in March 2018.
At that time, Nissui will end its long financial association with ANZCO Foods, also dating back to 1989. Nissui is a 50 percent shareholder, with Māori, in the Sealord Group. Sir Graeme Harrison has been a Nissui appointed director on the Sealord board since 2011 and will retire from that position at the end of this year.
Itoham Yonekyu Holdings is a listed company in Japan and has some of Japan’s most notable investors. The largest is the giant Misubishi Corporation, which holds 39 per cent of the shares.
The culmination of a process
ANZCO founder and current chairman Sir Graeme Harrison is “very pleased” with the announcement, which he says is the culmination of the process he started in 2011, when he indicated his intention to retire by 70.
“Existing shareholders held pre-emptive rights and Itoham, as the largest shareholder needed to determine what it wanted to do,” he explains. Itoham appointed directors started attending ANZCO board meetings, something they rarely did previously. The 2015 increase in Itoham’s shareholding was the forerunner to now moving to 100 percent ownership, he says.
“ANZCO’s growth in its 34 year history has almost entirely been funded by internal earnings and bank funding support. Shareholder changes have not introduced new capital. All shareholders throughout the company’s history have had positive returns on their investments, with some, including the original owner, the New Zealand Meat producers’ Board, and other long-standing shareholders, including Nissui and myself, well rewarded.”
Harrison believes the decision by Itoham Yonekyu Holdings to move to full ownership is a very positive development for the New Zealand meat industry, “and should not be underestimated.”
The company says the move is a strong vote of confidence in the New Zealand red meat sector. ANZCO Foods is an important part of the company’s strategy to grow its business internationally, particularly in Asian markets outside Japan. It will be able to capitalise on synergy benefits and efficiencies from the considerable experience and networks of Itoham Yonekyu and Mitsubishi Corporation.
“It is very much also a vote of confidence in the ANZCO management team, the company’s network of overseas offices and the quality of our production assets in New Zealand,” adds Harrison.
Full retirement is not yet in Harrison’s sights. Since 2015, he has become a sizeable cattle and sheep farmer with his family.
“While this will become my main personal business focus, I will continue my associations with Lincoln University and with some community activities in Canterbury where I now live.”
Stability of ownership important for any business, says Barber
“Itoham has signalled that there will be no change to ANZCO’s business operations in the foreseeable future which is a credible claim, when one considers the stability of the investment since the beginning,” notes meat industry commentator Allan Barber.
“There have only been three chief executives, Harrison, Mark Clarkson who retired earlier this year and current incumbent Peter Conley, while the Japanese owners have maintained a constant board presence.”
Stability of ownership is important for any business, as it demonstrates faith in management and overall strategy, says Barber.
“In ANZCO’s case the company has always had a close link to the Japanese market, emphasised by its ownership structure, starting out as a Japan-focused subsidiary of the Meat Board before the management-led buyout. The first joint venture to establish Five Star Beef and its associated feedlot was designed specifically to source and rear Angus prime steers which had the two main advantages of being pure black, like Wagyu, and being able to produce the intermuscular seams of fat, known as marbling, which is much prized in Japan.”
Although ANZCO has expanded over the years to encompass sheepmeat processing and other types of beef, the company’s key point of difference has at all times been to add the maximum amount of value to every animal it processes, Barber notes.
“As New Zealand’s fifth largest exporter, ANZCO is a New Zealand success story and its overseas ownership has contributed positively to, rather than hindered, its success. It is a great example of the benefits that accrue from overseas investment of the right kind. We can do with more such examples.”
ANZCO Foods exports prime New Zealand beef and lamb to 80 countries around the world from its seven meat processing and three manufacturing sites. In 2016, the company calculated it contributed $1.3 billion to the New Zealand economy through wages, salaries and supplier payments and sees that contribution increasing as it continues to grow.
The company also creates and designs sophisticated food and healthcare solutions.
It is a partner, with Government, in two Primary Growth Partnership programmes. The first is the $58 million FoodPlus programme aiming to develop new and innovative uses the parts of the red meat carcase that traditionally generate less value. It is also a partner in the Red Meat Profit Partnership to improve on-farm productivity and profitability.