Burns Philp drama was testing ground for Hart's move

By Duncan Bridgeman

Friday 12th April 2002

The patient midas touch of New Zealand's richest man, Graeme Hart, could be put to the test again following the entrepreneur's decision to buy Fonterra offshoot New Zealand Dairy Foods.

Mr Hart shrugged off several strong competitors for Dairy Foods, including farmer-backed Great Milk Company, which owns half the company, and Australia's National Foods, which was blocked by competition watchdog the Commerce Commission.

Subject to dairyfarmer approval, Mr Hart's Rank Group would pay $119 million for Fonterra's half share.

Mr Hart's foray into Dairy Foods is interesting, given the nature of the industry. Dairy Foods has to rely on getting its milk supply at low enough prices to produce product efficiently. Last year the company signed an agreement with Fonterra to buy raw milk and other agreements at the same price as Fonterra subsidiary Mainland. However, the deal, which includes the licensing of the Chesdale cheese brand, lasts only 10 years.

But Mr Hart is not one to back away from a challenge.

He has recently confounded his critics by turning a massive loss in Australian-based spice and yeast group Burns Philip into a equally massive profit.

Four years ago, he watched his $310 million investment for a 20% stake shrink to a few tens of millions in a matter of weeks and he was pilloried in the media as a riches-to-rags sucker. He ignored the publicity, took charge at Burns Philp and patiently resurrected the firm.

A recent surge in the share price of Australia's Burns Philp has made Hart New Zealand's richest man by a big margin.

Burns Philp's share price recently hit 64Ac, valuing his holdings in the company at $1.03 billion.

Mr Hart built his fortune from scratch.

In 1987 at the age of 22 he set up Hart's Printing and Office Supplies which became a success largely because of his huge appetite for work.

He sold it in the mid-1980s and with partner Iain MacGibbon set up Rank Group, which specialised in party-equipment hire, and floated on the Stock Exchange in February 1987.

He first raised eyebrows in New Zealand in 1990. In a coup that surprised everyone in the business community, Rank Group bought the Government Printing Office for $28 million.

With total assets of just $8.5 million, Rank was not even half the size of Government Print, which had a book value of $43.9 million. Soon after, Rank shares hit the turbocharger and Hart was well on his way to becoming super-rich.

At times he has kept a low profile, riding out troughs while calculating his next move.

In 1994 Australia's Trade Practices Commission blocked a takeover offer for Foodland Associated by his private interests and retailer Coles Myer.

In 1996 he sold his printing and stationery empire, including Whitcoulls, for $A320 million.

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