28 March 2002

Act MP Gerry Eckhoff's ill-informed statement on Animal Health Labs does nothing more than demonstrate his ignorance of the State Owned Enterprise model and the law under which it operates, the Minister for State Owned Enterprises Mark Burton said.

"Gribbles Ltd is purchasing the Animal Health Labs from AgriQuality," Mark Burton said. "Consequently, the negotiations have properly been with AgriQuality, not with the government as Mr Eckhoff suggested. Indeed, it would be quite improper for the government to have been directly involved.

"Because this government has a clear commitment to retain and build the value and effectiveness of SOEs, boards must have the ability to adjust the configuration of company assets to maximise company effectiveness. It was the judgement of the AgriQuality board that the AHLs were not a good fit with their core business.

"While SOE boards are of course required to consult with shareholding ministers ahead of any proposal for major structural change, this divestment falls well below the required threshold.

"For the record, I have been advised that the purchase offer was very attractive, and was substantially more than the book value of the AHLs; and that the risk and costs of going to open tender would have outweighed the benefits of this offer.

"AgriQuality has acted responsibly by consulting with MAF on biosecurity issues. MAF confirmed that no biosecurity risks result from this transaction. And as a good employer, AgriQuality has ensured that all existing employees are retained on their current terms and conditions of employment.

"It is particularly ironic that a member of a party that would happily sell off the entire SOE portfolio to whoever wanted to buy it, now complains about an operational decision duly made by the board of one of those businesses," Mark Burton said.

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