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New Zealand Mergers and AcquisitionsTrends and insights
March 2016
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National Law Firm of the Year for New Zealand 2016 IFLR Asia Awards
HOME TRENDS AND INSIGHTS – MARCH 2016
Contents
2016 – New Zealand M&A at a glance ............................................................................................... 1
2015 was big ................................................................................................................................................... 2
Another big year ahead? ............................................................................................................................. 3
Private equity – welcome back Australia .......................................................................................... 4
China and Asia – still big players ............................................................................................................ 5
The public sphere – opportunities and near opportunities ...................................................... 6
Schemes – is the market changing its mind? ................................................................................... 7
Overseas investment regime – slow timeframes and other issues ..................................... 8
Acquisition finance – banks are keen to lend ............................................................................... 10
W&I insurance – big claims lead to changes ................................................................................. 11
Tax – BEPS is coming ................................................................................................................................ 12
Chapman Tripp’s M&A team .................................................................................................................. 13
4 | NEW ZEALAND MERGERS AND ACQUISITIONS
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TRENDS AND INSIGHTS – MARCH 2016 | 1HOME
This publication explores likely trends and issues in the New Zealand M&A market this year.
We expect the New Zealand market to show another strong performance in 2016, following a record 2015 for global M&A.
Expected trends in 2016 • Strongactivityintheagedcare,telecoms,primaryproductsandenergysectors.
• Strongprivateequityinterest,bolsteredbynewlyraisedandhungryAustralianandNewZealandfunds.
• Chinastillinbuymode,particularlyinprimaryproductsandtourism.
• GeneraloffshoreinterestinNewZealandassets,particularlyoutoftheUS,drivenbyaweakeningKiwidollar.
• Bankskeentofundacquisitions,butpricingisnowexpectedtobeonanupwardcurve.
• AdevelopingtasteforschemesofarrangementasanalternativetooffersundertheTakeoversCode.
2016 – New Zealand M&A at a glance
• Prospectivelocalauthorityassetsales,withafocusonChristchurchCityCouncil.
• OverseasInvestmentOffice(OIO)decisiontimeframestoremainanissue,butimprovingincrementally.
• Premiumincreasesforwarrantyandindemnityinsuranceandheightenedunderwriterscrutiny,followingmajorclaimsinAustralia.
• UpcomingBaseErosionandProfitShifting(BEPS)globaltaxchangeswillbegintoimpactvaluationandtransactionstructuring.
2 | NEW ZEALAND MERGERS AND ACQUISITIONS
2015 New Zealand highlightsStrong activity in the energy sector
• Vector’s$952.5millionsaleofitsgastransmissionpipelinebusinesstoFirstStateInvestmentfunds
• ZEnergy’s$785millionpurchaseofChevron’sNewZealandCaltexretailbusiness
Continued Asian interest in primary products
• ShanghaiMaling’s$261millionpurchaseofacontrollinginterestinSilverFernFarms
• SumitomoForestry’s$370millionpurchaseofforestsnearNelson
The return of Australian private equity funds
• PacificEquityPartners’acquisitionofAcademicCollegesGroup
• ArcherCapital’sacquisitionofNewZealandPharmaceuticals
• PacificEquityPartners’acquisitionofManukaHealthNewZealand
Record year globally, big year locallyGlobalactivitywasledbymajortransactionsintheUSandAsia,andsupportedbyplentifuldebtfinancingandstrongcorporateactivity.
NewZealandM&Awasenergeticwithanuptickinoverallvolumecomparedto2014,atover$8billion,despiteadeclineinlarge(circa$1billion)deals.
Dealstatisticsshowthattheyearwas,withafewnotableexceptions,dominatedbyprivatetransactionswithcross-borderelements.
2015 was big
2015 was a mammoth year for global M&A, breaking 2007 records with global deal volumes above US$5 trillion.
Top 50 New Zealand deals
By sector Domestic vs cross-border
Public vs private
Source: Mergermarket
DomesticCross-border
ConsumerHightechnologyGeneralmanufacturingandservicesIndustrials/materialsEnergyFinancialservicesAgricultureTransportationConstructionHealthcareTelecommunicationsRealestate
PublicPrivate
TRENDS AND INSIGHTS – MARCH 2016 | 3HOME
With a busy start to the year, 2016 looks set to continue 2015’s theme of strong M&A volumes. Far from the usual summer doldrums, the M&A year opened strongly.
Another big year ahead?
Weexpectcorporateactivitywillcontinuetobedrivenby:
• cheapandavailabledebt
• thedesiretosecureandstrengthencompetitivepositionsinexistingmarkets
• expansionintonewmarketsandbusinesslines
• sloworganicgrowth.
Deals to date• NZX-listedDiligentandNuplexareboththesubjectofbilliondollaroffersfromUS-controlledbidders
• GlobalinvestmentgiantBlackstone,throughitsTacticalOpportunitiesunit,announcedthepurchaseofLendlease’sNewZealandretirementvillageportfolio
• FletcherBuildingannouncedthe$315millionacquisitionofprivately-heldroadconstructionandmaintenancebusinessHiggins
• TrustPowerhasannouncedaplannedspin-offofitswindandsolarassets,suggestingcontinuedactivityintheenergysector
• Speculationisgrowingthatthetelecomssectorcouldseeoneormoremajordealsinthenext12months
EDUCATIONMEDIA, TELECOMS AND IT
HEALTHCARE+
AGED CARE ENERGY
SECTORS TO WATCH
Contested deal dynamics in 2016 • Offshorebiddersmorecompetitiveonpriceduetoaccesstolower-costcapital,exchangerateadvantagesand,insomecases,loweryieldexpectations
• OIOasignificantlevellerinfavourofdomesticbidders,withOIOtimeframesanduncertaintyagrowingissueforvendors
• NewZealandbidders,waryofoffshorecompetition,increasinglyexpectedtopursueproprietarydeals
PRIMARY PRODUCTS (NOT JUST DAIRY)
4 | NEW ZEALAND MERGERS AND ACQUISITIONS
A$Freshly raised Australian
private equity funds
2015 was a busy year for Australian buy-side private equity activity in New Zealand. We expect the same in 2016.
Private equity – welcome back Australia
AccordingtoAVCAL,Australianprivateequityfundraisingalmosttrebledin2015toA$2.7billion,withninefundssuccessfullyrecordinginterimorfinalclosings,includingPacificEquityPartnersFundVandCrescentCapitalPartnersFundV.ThemandatesformanyofthesefundsincludeNewZealand,whichinthemainhasbeenahappyhuntinggroundforAustralianprivateequity.
ThereisalsoagenerationalshiftunderwayatsomeprominentAustralianfirms,withanewgenerationofleadershipshowingawillingnesstoengageinsmallermid-markettransactions–perhapstakingtheopportunitytoroll-upsimilarbusinesses.
ForNewZealandprivateequity,weexpectacontinuedfocusonmid-marketdeals,withanoccasionalforayintolargertransactionsinpartnershipwithotherinvestors,suchasIwi,theNewZealandSuperannuationFundorACC.ThiswillseegreatercompetitionbetweenNewZealandprivateequityfundsandtheirAustralianpeers,potentiallytothebenefitofNewZealandvendors.
MuchasinAustralia,severalNewZealandprivateequityfirmsareunderstoodtobeundertakingorcontemplatingnewfundraisings,withgenerationaltransitionagainafeature.
2015 AUSTRALIAN PE DEALS IN NEW ZEALAND
• Pacific Equity Partners’ acquisition of Academic Colleges Group
• Archer Capital’s acquisition of New Zealand Pharmaceuticals
• Pacific Equity Partners’ acquisition of Manuka Health New Zealand
• Allegro Private Equity’s acquisition of Carpet Court
Pacific Equity Partners Fund V
A$2.1 billion
Crescent Capital Partners Fund V
A$565 million
Next Capital Fund III
A$300 million
Mercury Capital Fund 2
A$300 million
Allegro Private Equity Fund II
A$180 million
TRENDS AND INSIGHTS – MARCH 2016 | 5HOME
Chineseinvestmentmightbetemperedbyglobaleconomicuncertainty,butwehaveseennoevidenceofthattodate.
Onthecontrary,theimpositionoftightercapitalcontrols,apossibilitycurrentlybeingfloatedbysomeanalysts,maypushChineseinvestorstoincreasethepaceofoutboundinvestment.ItisnotablethatBeijingcontinuestobackits“going-out”strategy(promotingoutwardforeigninvestment),the“onebelt,oneroad”policy(adevelopmentalandgeopoliticalinitiativefocusedinEurasia)andthecontinuedinternationalisationoftheRMB.
Throughourin-houseChinaDeskandourcontactsinandfrequentvisitstoChina,ChapmanTripphasbeenatthelegalforefrontofChineseinvestmentinNewZealand.
Chineseinvestorinterestinprimaryproductswillcontinuetobeatheme,althoughtheGovernment’srejectionofShanghaiPengxin’sOIOapplicationtopurchaseLochinverStationmayhaveanegativeimpactonambitiouslandtransactions.TheresultsofShanghaiPengxin’sjudicialreviewoftheLochinverdecisionwillbecloselywatchedbothhereandinChina.
OutsidetheChinastory,JapaneseinvestorscontinuetoshowinterestinNewZealand,particularlyintheforestryandpapersector.AccordingtoStatisticsNewZealand,asat31March2015,Japan’stotalinvestmentinNewZealandwas$11.6billion,makingitourfourth-largestinwardinvestor.
FollowingtheacquisitionofCarterHoltHarvey’spulp,paperandpackagingbusinessbyOjiPaperandaJapaneseinvestmentfundin2014,listedJapanesecompanySumitomoForestryhascontractedtobuyasignificantforestestatenearNelsonfor$370million.ThepurchasewillsecuresupplyforSumitomo’sNelsonPineIndustriesplant,asignificantemployerintheNelsonregion.OjiPaperisalsocommittingtofreshinvestmentatitsPanPacForestProductsfacilityatMilburn.
Chinese FDI in New Zealand by sector – ultimate investor basis
Source: NZTE China FDI/ODI database
Note:May2015actualandannounced.TotalcommittedandannouncedFDIfromChinaincludingHSKARwas$6.6billiontoMay2015.
PrimaryindustryandfoodForestryManufacturingFinancialservicesInfrastructure/utilitiesHotel/commercial
Total$6.6bn
2015 was another busy year for Chinese investment in New Zealand and we are seeing continued Chinese demand in the agriculture, forestry, tourism, property and banking sectors.
China and Asia – still big players
…the imposition of tighter capital controls, a possibility currently being floated by some analysts, may push Chinese
investors to increase the pace of outbound investment. ”“
6 | NEW ZEALAND MERGERS AND ACQUISITIONS
Government is an important player in M&A – social housing and local government asset sales will both feature in 2016.
The public sphere – opportunities and near opportunities
OpportunitiesexistfordevelopersandfinancialinvestorstoparticipateintheGovernment’sreformoftheaffordableandsocialhousingsectors.
TheGovernmentwillmakeunder-usedorvacantCrownlandinAucklandavailableforresidentialdevelopmentaspartofabroaderefforttoincreasethesupplyofaffordablehousingintheAucklandmarket.
ItisalsoengagedinaprogrammetotransferHousingNewZealand(HNZ)stocktoconsortiamadeupofatleastonecertifiedcommunityhousingprovider,andpotentiallyincludingprivatesectordevelopersandinvestorsparticipatinginhopeofearningafinancialreturn.
Toassistwiththecostoffundingthepost-earthquakerebuild,ChristchurchCityCouncilhascommencedasaleprocessforCityCare,aCouncil-ownedconstructionandmaintenancecompany,whichisexpectedtobecompletedinthefirsthalfofthisyear.
TherehasbeenspeculationthatstakesinChristchurchInternationalAirport,LytteltonPort,andOrion(anelectricitylinesbusiness)mayalsobeofferedtothemarketifneededtoaddresstheCouncil’slong-termfundingneeds.Butassetsalesarepoliticallycontroversialandsofarnodecisionshavebeentaken.
ThereisgrowingdebateinAucklandaboutwhetherlargeAucklandCouncilassets,suchasPortsofAuckland,shouldbesoldtofundinfrastructurespendingandsuppressratesrises.Nomovementislikelythisyear.
Social housing privatisationLocal government asset sales
LegislationpassedinFebruarywillfacilitatethisbyenablingMinisterstosidesteptheHNZBoardinordertosellorleaseHNZpropertiesforthepurposeofsocialhousingreform.
RFPsforthefirsttwotransactions,involvinginexcessof1,200HNZhomesinTaurangaand300HNZhomesinInvercargill,areexpectedtobeissuedinMarch.
Recently,bywayofcomparisonwiththelistedretirementvillagesector,theMinisterofFinancehasraisedtheprospectoffullyprivate,listedcompaniesprovidingsocialhousinginreturnforguaranteedsubsidieswithinfiveyears.
TRENDS AND INSIGHTS – MARCH 2016 | 7HOME
Code takeover
Scheme of arrangement
Role of target
Notanegotiatedtransaction.Thetarget’sshareholdersarethecounterparty.Canbehostile.
Anegotiatedtransaction.Theactiveinvolvementandconsentofthetarget’sboardisessential.
Cannotbehostile.
Compulsory acquisition/take private
Requiresanoffertoholdorcontrol90%ofthevotingrightsinthetarget.
Canbeachievedwiththesupportof75%ofthevotesineachinterestclassandasimplemajority
ofallvotesentitledtovote.
Flexibility
Astand-aloneprocess.
Canbecoupledwithothertransactions,suchascapitalraisings,onanallornothingbasis.
ThepossibletakeoverofNuplexisnoteworthyasthefirstdeclaredexampleofatrue“squeeze-out”schemesincemajorreformstothelawsaffectingschemesin2014.
SchemeshavebeenrareintheNewZealandmarket–insharpcontrasttoAustralia,whereasignificantmajorityoftakeoversarestructuredasschemes.Thishasreflectedambivalenceamongsomemarketparticipantsand,historically,fromtheTakeoversPanel,arisingfromconcernsthattheschemestructureofferslessprotectiontoshareholdersandcanbeusedcynicallytoescapethestricturesoftheCode.
ThePanel’spositionhasnowchanged.Providedshareholdersaresuppliedwithinformationequivalenttothatrequiredforatakeover,thePanelnowacceptstheuseofschemesevenwheretheunderlyingtransactionisatakeoverthatcouldbemadeundertheCode.
ThePanel’scriticalfocuswillinsteadbeonensuringthecorrectcompositionofinterestclassesrequiredtoapproveascheme–anessentialpracticalissue.Informedlegaladvocacy,drawingonrelevantcaselawanddealprecedentsinAustralia,willbeimportantinensuringaneffectiveoutcomefromthePanelandCourt.
Prospects for 2016Weexpecttheuseofschemestoeffecttakeoverswillbeagrowingtrendin2016.HistoricallysomeboardshavebeenconcernedthatschemesweremotivatedbyadesiretoavoidtheCode’s90%compulsoryacquisitionthreshold.
Inourviewthisconcern,althoughlegitimate,shouldnotbeusedtoprecludecarefulconsiderationofthebenefitsthatschemescouldhavefortargetcompaniesandtheirshareholders–particularlyifahigherpriceisonofferfromascheme.
Boardsneednotactonlyasreferees,issuingproforma“donothing”announcementsandengaginganindependentexpert.Instead,theycannegotiateonbehalfofshareholders,usingtheseatatthetableaffordedbytheschemeprocesstopushforbetterterms.Tofacilitatethis,wehavedevelopedtakeoverandschemeresponsestrategiesforclients.
Thismodeloftheactivistboardiscommoninmanyoffshorejurisdictions,suchasAustraliaandtheUS,andshouldbemorecommonhere.
The recent announcement of advanced negotiations between Nuplex Industries and private-equity controlled resins maker Allnex Belgium could signal a major new trend in New Zealand deal making.
Schemes – is the market changing its mind?
vsvs
vs
vs
8 | NEW ZEALAND MERGERS AND ACQUISITIONS
Sensitive land that isn’t so sensitiveOneofthecausesofOIOdelaysisthedefinitionofsensitiveland.Thedefinitioncaptureshighcountrystations,primewaterfrontlandandotherareasofoutstandingnaturalbeautyandeconomicvalue.Italsocapturesdirtyindustrialeffluentcreeksandentirelyunexceptionallandlocatednexttolocalreservesandparksofnoparticulardistinction.
WethinktheGovernmentshouldusethegeneralexemptionpowerscontainedintheOverseasInvestmentActtoexcludesitesthataremanifestlyundeservingofthesensitivelandtreatment.Thiswouldfreeupresourcestofocusonthoseapplicationsworthyofdetailedexamination.
Another busy year in M&A will continue to put pressure on New Zealand’s overseas investment regime. Below we highlight some major issues for 2016.
Overseas investment regime – slow timeframes and other issues
Approval timeframesSincethecounterfactualtestwasintroducedin2012,timeframesforOIOdecisionsinvolvingsensitivelandhavelengthenedsignificantlyandarenowmuchslowerthanforcomparablejurisdictions,suchasAustralia,wheremanydecisionsaremadewithin30daysofnotification.
Thesedelaysare:
• causingsomevendorstoacceptlowerbidsfromdomesticbuyersratherthanfacetheincrementalriskanddelayofOIOapproval,and
• compromisingNewZealand’sreputationasawelcomingandstraightforwarddestinationforforeigninvestment.
TheOIOisnowseekingtomanageexpectationsbyadvisingapplicantsthattheremaybealengthywaitbetweenwhenapplicationsaresubmittedandwhentheygotoinitialreview.Itisalsohiringmorestaff,whichshouldhelptoaddresstheproblemovertime,andMinistersareturningarounddecisionsmorequickly.
Butformanyinvestorsthrough2016,anyimprovementswillbeincrementalratherthantransformative.
OIO TIMING – OUR RECENT EXPERIENCE
• Largertransactionsinvolvinglandtakearound110workingdaysfromsubmissiontodecision(excludingoutliers),onaverage
• Ministerialapprovaladds10workingdaystowaitingtimes,onaverage
• Transactionsnotinvolvinglandcanbeturnedaroundinamuchshortertimeframe–asquicklyastwomonths
• Lochinver(anextremecase)took14monthsfromapplicationtodecision
…the Government should… exclude sites that are manifestly undeserving of the sensitive land treatment.”“
TRENDS AND INSIGHTS – MARCH 2016 | 9HOME
A COUNTERFACTUAL CONTROVERSY – SHANGHAI PENGXIN AND LOCHINVER STATION
• ChineseinvestorShanghaiPengxinappliedforconsenttopurchasecentralNorthIslandfarmingpropertyLochinverStationinJuly2014,for$88million.
• FourteenmonthslaterMinistersruledthatthetransactionwouldnotresultinsubstantialbenefitstoNewZealand,onacounterfactualtest.IndoingsotheMinistersrejectedtheOIO’srecommendationthatthedealbeconsented.
• ShanghaiPengxin’sbenefitclaimswerelargelydiscountedonthebasisthatahypotheticalNewZealandpurchaserwouldhavebeenlikelytomakesimilaradditionalinvestments.
• ShanghaiPengxinhasindicateditwillbringjudicialreviewproceedingsintheHighCourtchallengingthedecision.ShanghaiPengxinalsoseekstoclarifytheappropriatecounterfactualtobeusedwhenMinistersassesssalesofnon-urbanlandtooverseasinvestors.
Counterfactual test tricky to administerAnothercauseofdelayisthecounterfactualtest.TheOIO’sapplicationofthecounterfactual–thescenarioagainstwhichaninvestor’sbenefitclaimswillbemeasuredtodeterminewhethertheinvestmentwouldbeofbenefittoNewZealand–canbeproblematic,leadingtounpredictableandoccasionallyillogicaloutcomes.
Forexample,themerepresenceofapotentialNewZealandbidderinacontestedsaleprocess(evenifthatpersondoesn’tlodgeabindingbidorindicatesinterestatapricemateriallylowerthanoffshorebidders)canbeenoughfortheOIOtoconcludethattheappropriatecounterfactualisahypotheticalNewZealandpurchaser.Inourview,thisislogicallyflawedandundulyconservativeinascenariowherethereisnocredibleNewZealandbuyer.
Ontheotherhand,weareawareofexampleswheretheOIOhasappliedthecounterfactualtestpragmaticallyincircumstanceswhereanoverlyrigidapplicationcouldhavedeniedthebenefitsclaimedbyanoverseasapplicant.
ClearerwrittenguidancefromtheOIOontheprocesstheywillfollowtodeterminetheappropriatecounterfactual,andhowtheywillthenapplythatdeterminationinpractice,wouldbehelpful.
Clearer written guidance from the OIO on the process they will follow to determine the appropriate counterfactual, and how they
will then apply that determination in practice, would be helpful. “ ”
10 | NEW ZEALAND MERGERS AND ACQUISITIONS
MajorbanksoperatingintheAustralasianmarketcontinuetohavegoodappetitefordealsandfundingisreadilyavailable.
LocallythebankmarketisgrowingduetothearrivalofmajorChineseplayerslikeBankofChina,IndustrialandCommercialBankofChinaandChinaConstructionBank,whicharekeentomoveintoacquisitionfinancefollowingsuccessfulparticipationsinAustralia.
Althoughbenchmarkinterestratesremainlowandmightmovelowerduetocontinuinglowinflation,otherfactorsareexpectedtoleadtoanincreaseindebtfundingspreads.Inparticular,thecostofcapitalisrisingforbanks,reflectingrecentbankregulatorycapitalissuancesasthevariousBaselrequirementscompelthemtostrengthentheirbalancesheets.Weexpectthesecostswillbepassedontoborrowers.
Creditriskpullbacksinparticularindustries,suchasdairy,arealsounderway.
Market features• Mostborrower-friendlycovenantpositionsincetheGFC,but“covenant-lite”termshavenotreturned
• Borrowersareseekingmoreheadroomincovenantsandequitycures
• Veryfewtransactionsinvolvingmezzaninedebt–limitedavailabilityandalackoftransactionslargeenoughtojustifyit
• Increaseduseofaccordion/incrementalfacilities–providingaborrowertheoptiontoincreaseitsfacilitylimitwithalenderinanticipationoftheneedformoreworkingcapitalorexpansionopportunities
• Strongpushfromsponsorsoncertaintyoffunding,inparticularpushingfortheremovalofmaterialadversechangeclausesduringthecommitmentperiod
• Competitivepressureoncommitmentandotherfees
For parties looking to debt fund acquisitions the domestic debt environment is the most attractive it has been since the GFC.
Acquisition finance – banks are keen to lend
Although benchmark interest rates remain low and might move lower due to continuing low inflation, other factors are
expected to lead to an increase in debt funding spreads.”“
TRENDS AND INSIGHTS – MARCH 2016 | 11HOME
Perhapsasadownstreamconsequenceofthis,wehavenoticed:
• anincreasedvigilancebyunderwriterswhenundertakingduediligenceonadeal
• indicationsthatcertaintax,environmentalandregulatoryriskswillbeincreasinglydifficulttoinsure
• asmallbutdetectableupwardshiftinpremiums,particularlyforthefirstlayerofinsurance(wheretheunderwriterwillbearthefirstloss)
• anincreasedreluctancetoinsureintheabsenceofthepartiesthemselveshavingundertakenduediligence,and
• awillingnesstoimposeadditionalqualifiersoninsuredwarranties,suchasknowledgequalifiers,independentofthesaleandpurchaseagreement.
OfthetransactionsChapmanTrippadvisedonin2015,23%featuredW&Iinsurance.
Asalways,vendorsandpurchasersshouldnegotiateatransactionthattheyproposetoinsureonanarms’-lengthbasis.Partiesshouldbeconsciousoftheincreasedlikelihoodofuninsurablewarranties,andtheimplicationsforthetransaction.
Vendorsinparticularshouldbeawarethattheymaybeaskedtostandbehinduninsurablewarrantiesandshouldconsiderthiswhenassessingcompetingbids.
Recently W&I insurers have been hit hard by large claims in Australia, most prominently in connection with Asahi’s 2011 purchase of Independent Liquor.
W&I insurance – big claims lead to changes
W&I INSURANCE
W&IinsuranceisaformofspecialtyinsurancewhichallowsvendorsandpurchaserstolayofftheriskofwarrantyandindemnityclaimsandisparticularlypopularinAustralasia.
Initiallyfavouredbyprivateequityfirmsseekingcleanexitsfromportfoliocompanies,itisnowusedinawidevarietyofdeals,largeandsmall.
Parties should be conscious of the increased likelihood of uninsurable warranties, and the implications for the transaction. ”“
12 | NEW ZEALAND MERGERS AND ACQUISITIONS
The global focus on BEPS will continue to increase through 2016 following the publication of the OECD Final Reports in late 2015.
Tax – BEPS is coming
AkeyaimoftheBEPSprojectisto:
…better align the location of taxable profits with the location of economic activities and value creation, and improve the information available to tax authorities to apply their tax laws effectively.
Themeasuresproposedtoachievethisarebroadranging,andhavethepotentialtosignificantlyimpactthevaluationofcross-borderbusinessesandthestructuringofM&Atransactions.
KeyBEPSproposalsinclude:
• Restrictingthedeductibilityofinterestandotherfinancingpayments
• Neutralisingtaxmismatchesarisingfromhybridentitiesandinstruments
• EnhancingTransferPricingrulestobetteralignthetaxationofprofitswitheconomicactivity
• PreventingtheabuseofTaxTreaties,includingthroughtreatyshopping,and
• Implementingstandardisedcountry-by-countryreporting.
Participants in transactions likely to be affected by these changes… should seek advice before committing to
arrangements that may soon come under increased scrutiny.”“
TheGovernmenthasyettoannounceanyconcreteplansfortheimplementationofpoliciesbasedonBEPS,butweunderstandofficialsarealreadyworkingonadiscussiondocumentonhybridinstrumentstobereleasedlaterthisyear.TheGovernmentisalsoproposingchangestoNewZealand’snon-residentwithholdingtaxrulesthatarelikelytoaffectfundingstructuresforcross-bordergroups/acquisitions.
Participantsintransactionslikelytobeaffectedbythesechanges(whetherinconnectionwithacquisitionfundingstructuresortheunderlyingbusinessitself)shouldseekadvicebeforecommittingtoarrangementsthatmaysooncomeunderincreasedscrutiny.
TRENDS AND INSIGHTS – MARCH 2016 | 13HOME
Chapman Tripp’s national M&A team partners with clients to successfully execute some of the biggest, most complex and challenging transactions in New Zealand.
OurCorporateandCommercialteamhasadvisedonmoreM&AworkthananyotherNewZealandfirm,includingmanyofNewZealand’smostsignificantcross-borderM&Adeals.
Wehaveaproventrackrecordofdeliveringinnovative,commercialsolutionsthatcreatevalueforourclients.Weunderstandwhatittakestogeteventhemostchallengingdealsacrosstheline:wemaximiseopportunity,identifyandmanageriskearlyonandworkstrategicallywithourclientstoachievetheoutcometheywant.
Weplayasignificantroleinmerger,acquisitionanddisposaltransactionsforinternationalandNewZealandclients,largemultinationalsandleadingprivateequityplayersacrossmanyindustries.Weregularlyadviseonthestructure,strategyandimplementationoftakeovers,amalgamations,jointventuresandothercomplextransactions.ChapmanTripp’sworkforinternationalclientshasinvolvedsomeofthemosthighprofileOIOapplicationsinrecenttimes.
Chapman Tripp’s M&A team
Chapman Tripp recent M&A highlights Wehaveadvised:
• Vectoronthe$952.5millionsaleofitsgastransmissionpipelinebusinesstoFirstStateInvestmentfunds
• ZEnergyonits$785millionpurchaseofChevron’sNewZealandCaltexretailbusiness
• AcademicCollegesGroupanditsshareholdersonthesaleofACGtoPacificEquityPartners
• DirectCapitalonthesaleofNewZealandPharmaceuticalstoArcherCapital
• ManukaHealthNewZealandanditsshareholdersonthesaleofMHNZtoPacificEquityPartners
• LendleaseonthesaleofitsNewZealandretirementvillageportfoliotoBlackstone
• SumitomoCorporationonitsacquisitionofpineforestfromTasmanBayForestsCompanyfor$370million
• HigginsGroupHoldingsonitssaletoFletcherBuildingfor$315million
• EvolutionHealthcareonitsacquisitionofAcurityHealthGroupandsaleofBoulcottHospital
• Sparkonthe$106millionsaleofTelecomRentalstoFlexigroup
• EBOSGrouponits$80millionpurchaseofRedSeal
• KathmanduinconnectionwithBriscoes’unsuccessfultakeoveroffer
NZ Deal Team of the Year 2015 Australasian Law Awards
NZ Deal Maker of the Year (John Strowger) 2015 Australasian Law Awards
Consistently ranked New Zealand’s top law firm by M&A deal volume
Mergermarket
14 | NEW ZEALAND MERGERS AND ACQUISITIONS
ADRIEN HUNTER – SENIOR ASSOCIATET: +64 9 357 9501 | M: +64 27 504 6574E: [email protected]
JOSHUA PRINGLE – SENIOR ASSOCIATET: +64 9 358 9831 | M: +64 27 504 6572E: [email protected]
GEOF SHIRTCLIFFE – PARTNERT: +64 4 498 6322 | M: +64 27 481 1699E: [email protected]
JOSH BLACKMORE – PARTNERT: +64 4 498 4904 | M: +64 21 828 814E: [email protected]
ROGER WALLIS – PARTNERT: +64 9 357 9077 | M: +64 27 478 3192E: [email protected]
RACHEL DUNNE – PARTNERT: +64 9 357 9626 | M: +64 27 553 4924E: [email protected]
TIM TUBMAN – PARTNERT:+64 9 357 9076 | M: +64 27 344 2178E: [email protected]
JOHN STROWGER – PARTNERT: +64 9 357 9081 | M: +64 27 478 1854E: [email protected]
PIP ENGLAND – PARTNERT: +64 9 357 9069 | M: +64 27 434 8854E: [email protected]
STEPHEN LOWE – PARTNERT:+64 9 357 9042 | M: +64 27 490 4633E: [email protected]
JEREMY GRAY– SENIOR ASSOCIATET: +64 9 357 2726 | M: +64 27 498 4941E: [email protected]
WellingtonAuckland
BRADLEY KIDD – PARTNERT: +64 4 498 6356 | M: +64 27 224 1271E: [email protected]
TRENDS AND INSIGHTS – MARCH 2016 | 15HOME
CATHRYN BARBER – PARTNERT: +64 9 357 9025 | M: +64 27 447 9163E: [email protected]
DAVID PATTERSON – PARTNER
T: +64 4 498 6330 | M: +64 27 610 2031 E: [email protected]
EMMA SUTCLIFFE – PARTNERT: +64 4 498 6323 | M: +64 27 294 9114E: [email protected]
ROSS PENNINGTON – PARTNERT: +64 9 357 9030 | M: +64 27 442 2161E: [email protected]
ALISTER MCDONALD – PARTNERT: +64 3 353 0392 | M: +64 21 477 935E: [email protected]
FIONA BENNETT – PARTNERT: +64 3 353 0341 | M: +64 27 209 5871E: [email protected]
NICK LETHAM – SENIOR ASSOCIATE T: +64 3 353 0024 | M: +64 27 204 7323E: [email protected]
Christchurch Finance Tax
BEVAN MILES – SPECIAL COUNSELT: +64 9 357 8986 | M: +64 21 240 7387E: [email protected]
GRAEME OLDING – PARTNERT: +64 9 357 9259 | M: +64 27 591 6103E: [email protected]
MARK REESE – PARTNERT: +64 4 498 4933 | M: +64 27 231 1925E: [email protected]
Our thanks to Joshua Pringle, senior associate, for assisting to prepare this publication.
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