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Australia-Asia-Asia-Australia
It appears a looming question, will Australia become part of Asia via forging links and increasing trade (outside minerals /ore) or will Asia simply absorb Australia via buying its assets?
If the Singapore Stock Exchange offer of $8 billion plus for the Australian Stock Exchange were to come about, would it be good for the country or not? Bob Katter (independent Member for Kennedy, Queensland) thinks not; he’s spitting chips (or whatever they spit in North Queensland) over the issue. Greens leader Bob Brown is also anti-merger, putting forward a more coherent, but no less passionate, statement than Katter, and adding that ‘The Singapore Government put the phone down and hung Nguyen Van with no further compassion or consideration of Australia's opposition to the death penalty.’ One also has to consider the statement from the head of the Tokyo Stock Exchange, when he said that a merger of Singapore and Australia would leave them isolated. What if the three of them joined forces? Would that be good for the Asia/Pacific region as a whole?
It’s a heated debate; however, if the merger went ahead would Constellation Brands reconsider delisting from the ASX? The short answer would be ‘no’, and the official response would no doubt sound something like this: ‘As we said at the time we announced our plan to delist, our move is largely administrative because so few people still hold the Australian depositary listings. The proposed merger of the Australian Stock Exchange and the Singapore Stock Exchange does not really impact on the underlying strategy for our decision.’
Further along the road, one has to consider how it would suit Treasury Wine Estates when and if separated out of Fosters and floated as its own entity on the ASX. If the two exchanges became one, how much Asian money would that company attract? Would shares in the maker of Penfolds Grange be preferable to owning Grange?
Among the most notable events recently was Sotheby's auction of Ch Lafite in Hong Kong, which brought in a record $8.46 million, with the standout being the three bottles of 1868 that went for $234,883 each. One can’t help but wonder whether such an outcome will be good for all wine, French wine, or just a few elite Bordeaux wines? No doubt, there are those who will see it as a positive result; others as an elitist waste of money.
The Challenger Wine Trust (CWT) is the latest Australian wine asset to go to the Orient. Hong Kong based CK Life Sciences International have agreed to buy all of the issued units in CWT at $0.24 per unit, other than the 27.7 percent of total units on issue owned by the Challenger Life Company Limited. The offer is worth around $46 million, which means CFK and Challenger values the 4,264 ha (planted) of Australian and New Zealand vineyards, plus ongoing business at $63.6 million, plus debt of around $190 million, at a total of $253 million. In its last annual report, Challenger Trust had the vineyard valued at around $235 million. It appears to be a very good deal for the Chinese and pulls the trust out of the mire quite neatly. In effect, CK Life Sciences International and Challenger Life Company Limited will become partners in what was once the trust, and manage the vineyards accordingly.
One drawback is the concentration of tenants. All the New Zealand vineyards are tenanted to Delegats, and Australian Vintage accounts for a fair chunk of Australian vineyards. The plan is for the current CWT management to stay in place to run the new joint venture.
CK Life Sciences International is not new to Australian business ownership. Its acquisitions and interests include: Accensi, a chemical formulation company with plants in WA and Queensland; Fertico, based in Adelaide and marketing a range of organic based fertiliser products; and Lipa Pharmaceuticals, a contract manufacturer of complementary healthcare medicines based in South West Sydney.
There are others, but it’s important to know that CK Life Sciences is, in turn, part of the Cheung Kong Group. The combined market capitalisation of the Cheung Kong Group's Hong Kong listed companies amounted to HK$777 billion (Close to $100 billion) as at 30 September, 2010. The Cheung Kong Group operates in 54 countries and employs about 240,000 staff. It also owns A S Watson & Co, a retail and manufacturing company with a network of over 8,900 retail stores in 31 countries worldwide, including: Hong Kong, Mainland China, Taiwan, Macau, Austria, Belgium, Czech Republic, Estonia, France, Germany, Hungary, Indonesia, Ireland, Italy, Korea, Latvia, Lithuania, Luxembourg, Malaysia, Morocco, the Netherlands, the Philippines, Poland, Portugal, Romania, Russia, Singapore, Slovakia, Spain, Switzerland, Thailand, Turkey, Ukraine and the United Kingdom.
Of particular note is the fact that a segment of A S Watson & Co deals with wine retailing; their Senior Manager for Fine Wine is Jeremy Stockman (ex Cole’s supermarkets).
The Chinese are coming to Australia and in a big way, but it’s not just us they’re interested in; they’re also moving in on California, especially the Napa Valley. In October, a consortium of Chinese investors acquired Napa Valley winery, Silenus Vintners, as well as an adjoining parcel of land, all for US$6 million.
Naturally, the Americans are very gung-ho about their wine exports to China, boasting that in the five years up to and including 2009, sales of USA wines had quadrupled to 6.26 million litres. However, that figure excludes bulk shipments that end up in Chinese blends, and in 2009 these totalled 80.2 million litres. The total value of US wine exports to China in 2009 was US$912 million. Should Australia be worried? Not yet – the 2009 Australian wine exports to China totalled 40,471,644 litres, and were worth A$130,127,726.
As much as Australia wants to, and should, be a part of the Asia/Pacific, we remain outsiders. Maybe Mr Rudd should be offering to station the Chinese Army here, rather than the military personnel of a declining and increasingly bankrupt American Empire.
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