With every merger and acquisition (M&A) deal comes a range of potentially significant risks. This is particularly true for investments in the agriculture, food, and beverage (AF&B) sector where product quality, brand reputation and sustainable environmental practices are crucial. Critical evaluation of site operations is a key element of due diligence, particularly where there is an imbalance between business growth and investment in infrastructure.
To support a global food manufacturer’s potential acquisition of a dairy company based in New Zealand, Golder was engaged as part of an advisory team to evaluate potential environmental risks and liabilities related to the acquisition. Our client relied on our extensive experience in the New Zealand dairy industry to evaluate the environmental management practices of the target relative to the wider industry and to identify key environmental risks to the continued business operation and expansion.
Golder’s multi-disciplinary team included specialists experienced in providing air quality, wastewater, and planning services to the dairy industry in New Zealand and evaluating environmental contamination within the manufacturing sector.
Our approach focused on evaluating compliance with existing regulations and permits held for business operations, evaluating potential limitations to future expansion, and identifying material environmental impacts, risks, and liabilities. To evaluate potential limitations to future business expansion, we considered the company’s environmental compliance, the sensitivity and assimilative capacity of the existing receiving environment, current regulatory constraints, and anticipated changes to the regulatory environment.
Key areas of focus included discharges of contaminants to air, ground contamination, and management and disposal of stormwater and wastewater. Wastewater disposal was identified as a major risk resulting from limited storage capacity and historic compliance issues with achieving discharge quality limits, which could impact ongoing security of discharge options due to increasing sensitivity with discharges to the environment.
Golder completed a critical evaluation of the risks to business continuity, assessing options for investing in upgrades to the wastewater treatment plant and continued discharges to the river as compared to a proposed $25 million project to construct an ocean outfall to discharge wastewater. Another significant aspect of this project was evaluation of resource consents and risks associated with future permitting.
Golder’s team worked closely with the client and their legal team across multiple time zones, within a tight project timeframe, to provide strategic advice to the potential purchaser regarding environmental risks and liabilities, including a cost-benefit analysis of the proposed capital expenditure, to allow for appropriate provisions to be incorporated into the bid.