Andrew “Twiggy” Forrest and his former partner Nicola Forrest could be on the verge of launching a takeover of Australia’s largest cattle company after their shareholding increased to just under the takeover threshold this week.
Key points:
- Andrew and Nicola Forrest’s investment vehicle Tattarang has increased its stake in AACo to 19.5pc
- AACo runs more than 400,000 head of cattle across the Northern Territory and Queensland
- An analyst believes Tattarang could be interested in AACo’s carbon farming opportunities
The mining magnates’ investment company, Tattarang, has been slowly increasing its stake in Australian Agricultural Company (AACo) for the past three years, this week reaching 19.5 per cent.
Under corporate law, once a shareholder reaches 20 per cent ownership of a company they must make a takeover offer or not increase their holding by more than 3 per cent every 6 months.
AACo runs more than 400,000 head of cattle across 6.5 million hectares in the Northern Territory and Queensland, and is majority owned by United Kingdom billionaire investor Joe Lewis.
Tim Faulkner, director at corporate advisor Kidder Williams, said Tattarang’s continuing investment in AACo was “significant” but did not necessarily indicate plans for a takeover.
“I don’t want to overplay it because [Tattarang] has been building its stake over time, and the recent acquisition is only of another 1 per cent, so its most likely that the line of shares were on the market and they decided to take it to build their share in the company,” he said.
“AACo is one of Australia’s largest agricultural assets, so for someone like Twiggy, who has a strategy of building a portfolio in Australian agriculture, its an obvious one for him to invest in.
“I don’t know exactly what their strategy is, but oftentimes ASX-listed assets like AACo, which are an aggregation of a number of high-quality properties, attract interest from people like Twiggy, who think it is trading at a discount to its net-tangible asset backing because it’s an aggregation of properties that’s managed by a large corporate which has a lot of overheads attached to that.
“Over time, Twiggy may think that Joe Lewis might move on, and he might be able to break AACo up and realise that discount that currently applies as a listed company.”
AACo a ‘long term investment’
Tattarang did not respond to a request for comment but said in a statement last year it was “committed to investing in Australian businesses and brands that showcase the best of our country to the world and support local jobs”.
“Our investment in AACo is part of this commitment. This is a long-term investment for the Tattarang.”
IBIS World analyst Danny Martin said Tattarang could be interested in AACo because of its potential for diversified income with carbon farming opportunities.
“There are carbon credit opportunities with certain types of grazing management and there’s also the diverse land value of AACo,” Mr Martin said.
AACo claims it is the oldest continuously operating company in Australia, with the business dating back to 1824.
Mr Faulkner said the Forrest’s investment in AACo fit with their interest in iconic Australian brands, following their purchase of hat maker Akubra.
“This is one of the most iconic companies,” he said.
“It has been around for a very long time, it’s an aggregation of a number of iconic Australian stations, so it’s absolutely consistent with [their] broader strategy.”
