Australia’s biggest premium beef producer AACo has found itself at the centre of a quiet battle between two billionaires suspected of vying for influence and long-term returns from the cattle herd and land-owning company.
Mining magnate Andrew Forrest has splashed an additional $11.6 million on the Australian Agricultural Company through his private investment vehicle Tattarang, taking his stake from 17.4 per cent to 18.5 per cent, according to ASX documents published on Tuesday evening.
Fortescue Metals Group founder and chairman Andrew Forrest is buying bigger and bigger chunks of beef producer AACo.Credit:Trevor Collens
The $1.05 billion company is the nation’s largest cattle herd operator and owns about 6.4 million hectares, equivalent to 1 per cent, of Australia’s landmass.
British billionaire Joe Lewis, who owns Premier League soccer team Tottenham Hotspur, owns a controlling stake in AACo of nearly 51 per cent through his own investment vehicle Tavistock. A month after Tavistock’s holding pushed past the 50 per cent mark in mid-September, AACo announced that long-time board director Tom Keene was retiring, to be replaced by Tavistock vice president Sarah Gentry.
Forrest, the Fortescue Metals Group founder and chairman, has a number of Australian brands in his shopping cart, including iconic leather bootmaker R.M.Williams as well as an 11.5 per cent stake in Vegemite owner Bega Group.
“There is a strong focus on domestic agricultural plays within [Forrest’s] investment framework in the likes of Bega, the likes of Tassal, which has subsequently been acquired, and Huon in the past,” said Wilson Asset Management senior investment analyst Shaun Weick.
Tribeca Investment Partners lead portfolio manager Jun Bei Liu described AACo as “very asset rich” and said the billionaires were likely jostling to unlock the company’s untapped value.
“If managed properly, some of those assets are very, very precious. You can convert that into very high returning assets – as you know, a lot of those things are very hard to come by whether it’s land or wagyu herds,” she said.
“I’m not surprised you have billionaires sitting on the register, all thinking they can do something about it.
“You really need someone with the right distribution, right channels around the world, right branded restaurants to sell those products to – someone with really big brand power to push this business or realise the value of this one.”
Tavistock’s portfolio, which encompasses more than 200 companies across 13 countries, includes 16 restaurants and 8 hotels.
“Tavistock Group’s holdings are diverse and significant in scale,” its website states. “We routinely invest for the long term and take an active operating role.”
Airlie Funds Management star stockpicker John Sevior noted a common theme among Forrest’s investments was Australian agriculture.
“He’s not the shy, retiring type. It’s in his nature to want to make the play,” he said. The next question is: is there a bigger strategy? How far does he take it? Is there a big consolidation play?”
“My only thesis that I would proffer is: it feels like an asset diversification play in a broad industry where Australia does have some historical completive advantage.”
The slightly larger stake brings Forrest closer to the 20 per cent threshold, at which point he would have to make a takeover bid.
“As a proudly Australian company, Tattarang’s investment is part of our ongoing commitment to investing in Australian businesses and brands that support local jobs,” Tattarang chief executive John Hartman said in a statement.
Tattarang has had some changes at the top lately. Hartman replaces former NAB executive Andrew Hagger as chief executive of the $30 billion private investment vehicle after Hagger departed suddenly last month. Meanwhile, former Reserve Bank deputy governor Guy Debelle, who joined Fortescue Future Industries in June, on Wednesday announced to its board he was stepping down from his role as chief financial officer, citing health issues from a serious bicycle incident.
AACo reported a 27.7 per cent increase in operating profits to $38.3 million in the six months to September 30, compared with the same period last year, off the back of higher meat prices.
However, it has not paid a dividend to shareholders in 14 years.
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