Andrew Forrests other motive for protecting Tassie salmon
Confirmation that iron ore baron-turned environmentalist/animal welfare crusader Andrew Forrest was an underbidder for listed Tasmanian salmon farmer Huon, puts a different hue on the outspoken billionaire’s attempts to block fellow bidder JBS from buying the aquaculture group.
If one strips out the public relations blitz and the media campaign that Forrest is running to ‘out’ the Brazilian meat processor JBS, for what Forrest insists is its woeful animal welfare practices, the battle between Forrest and JBS looks more like a classic takeover play and Forrest is firing green bullets.
Forrest wants JBS to feel FIRB’s pain and fear.Credit:Ben Rushton
Before Forrest launched his attack on JBS, the Brazilian behemoth’s troubled record on animal husbandry, the fact that it’s major shareholders had done jail time for bribery and corruption of Brazilian officials, the fact it had settled a class action in the US on price fixing and the Australian tax investigations were not really on anyone’s radar.
Thanks to Forrest, these unseemly aspects of JBS’s corporate citizenship have been placed squarely in the public domain.
Forrest didn’t need to be a sharpshooter to hit JBS - it was a large target. And none of this will go unnoticed by the Foreign Investment Review Board (FIRB)- which is the major obstacle standing between JBS successfully completing its takeover of Huon.
Forrest’s campaign has thus been deftly honed. He has publicly called on the FIRB to take a closer look at JBS, and it is clearly within FIRB’s remit to examine the ‘character’ of a foreign application.
FIRB or the Federal Treasurer, Josh Frydenberg who gets the ultimate say, can rest assured that Forrest will use his media microphone to blast the government if it provides JBS with a tick.
None of this is to suggest that Forrest and his private company Tattarang are not genuinely concerned about Tasmanian fish nor the principles of animal welfare around ‘no pain, no fear’ on which he is calling for JBS to commit.
Forrest has been consistent with all manner of causes from animal welfare and cleaning plastic from the oceans to eradicating slavery. His interest in Huon marries money and social good - a concept known as impact investing.
Andrew Forrest’s Tattarang made an earlier offer for Huon, but it was rejected for being too low. Credit:Trevor Collens
But knocking JBS out of any bidding war also enhances Tattarang’s chances of buying Huon at a better price. And Forrest needs Frydenberg to help in that regard.
To be fair, another underbidder for Huon, the Canadian Cooke Aquaculture, is said to have used the same tactics of raising concerns about JBS with FIRB.
At the same time a knock back by FIRB could be a little awkward given it has approved JBS acquiring assets in Australia twice before.
Huon’s major shareholders, Frances and Peter Bender in February raised the prospect of them selling their combined 53 per cent stake. By June the company had entered the early stages of finding interested bidders.
At this point, Forrest lobbed a non-binding conditional offer for Huon but refused to agree to a Huon-requested standstill agreement on buying stock. Within weeks Forrest picked up an 8 per cent stake.
When JBS’ more generous $550 million, or $3.85 per share, offer was accepted by Huon, Forrest galvanised his intentions and acquired additional shares to take his stake to more than 18 per cent - enough to ensure the offer from JBS, which needed 75 per cent of Huon shareholders to vote in favour, would likely be unsuccessful.
JBS fought back - proposing a straightforward takeover cash offer that contained a minimum acceptance level of 50 per cent.
No pain, no fear principles aside and based strictly on commercial merits, JBS is clearly offering the best deal for shareholders. Indeed, even this offer looks a bit opportunistic given Huon’s share price has been ravaged by COVID and is well below its pre-pandemic level of $4.70.
No one is commenting on what Tattarang offered other than to say it was well below the current offer from JBS.
But if Forrest wants in on the Huon game he ultimately needs to put his money in the same place he eats his grilled salmon. He may find success in jettisoning JBS out of the race, but given there are other contenders there is still some distance to the finish line.
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Elizabeth Knight comments on companies, markets and the economy.
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