Keen Huon buyers await FIRB ruling as Forrest’s bid revealed

All eyes are on Australia’s foreign investment review board’s ruling on a mooted takeover of Tasmanian salmon farmer Huon Aquaculture by controversial Brazilian meat processor JBS, with new bids likely to emerge if the deal is knocked back.

Canadian aquaculture business Cooke is circling the business, and Fortescue founder Andrew Forrest could come in with an offer of his own after it was revealed on Monday he had already lobbed a low bid for the company earlier this year.

Andrew Forrest’s Tattarang could decide the fate of the takeover of Huon. Credit: Lee Griffith

Huon’s chairman, Neil Kearney, told shareholders Mr Forrest’s investment vehicle Tattarang made a non-binding and unconditional offer for the business earlier in the year after Huon began a review of its business operations.

Tattarang was given the opportunity to participate further in the review process and submit a final offer for the business but declined to do so. However, Mr Kearney said the firm’s offer was much lower than the $3.85 a share deal currently being offered for the business by the Brazilian meat processor JBS.

“We are focused on providing our shareholders, particularly retail shareholders, with the opportunity to secure proper value for all their Huon shares,” Mr Kearney said. “We will not be distracted by external noise that does not provide Huon shareholders with that opportunity.”

The revelation that Tattarang and Mr Forrest had made an early bid for Huon helps explain the billionaire’s actions in recent weeks and puts further pressure on him to lob another offer of his own, with a source close to the transaction saying it was time for Mr Forrest to “put up or shut up”.

On Friday, Mr Forrest indicated he could still be open to launching a takeover bid, saying he had ruled nothing out.

However, Mr Forrest is not the only other interested party waiting in the wings for a bite at Huon. Multi-billion dollar Canadian aquaculture giant Cooke has also confirmed its interest in the company.

“We believe Tasmania is an attractive state to invest in the future and Huon Aquaculture holds tremendous promise as an established company to continue producing world-renowned salmon and build upon the region’s talented fish farming workforce,” Glenn Cooke, Cooke Aquaculture chief executive said.

But it’s unlikely either party will pip JBS’ $3.85-a-share offer, with sources close to the deal indicating Tattarang and Cooke would likely wait for FIRB’s decision, which could easily rule against a takeover by the Brazilian business.

The investment review panel considers the ‘character of the investor’ when assessing whether to green light a foreign investment, specifically looking at a company’s corporate governance practices.

JBS has been plagued by controversy in recent years, with its founders and controlling shareholders jailed for bribing over 1800 Brazilian politicians and the company fined billions of dollars in a major corruption scandal. It has also faced two separate price-fixing cases in the US.

On Friday, Mr Forrest also urged FIRB to take a close look at the deal, saying the board should “consider some facts” when considering if the $500 million acquisition should proceed.

It wouldn’t be the first time FIRB has knocked back a bid on character grounds, with the board rejecting a takeover bid for GrainCorp by US company Archer Daniels Midland in 2014 partially due to concerns the US bidder was not of good character.

However, FIRB has also approved numerous acquisitions from JBS before, including Primo Smallgoods in 2015, but this was prior to the company’s corruption scandal.

In his letter, Mr Kearney further reinforced Huon’s commitment to animal welfare and environmental practices, and noted any new owner would be required to match those commitments.

The chair said the company would consider any new proposals from third parties on its merit from a shareholder value perspective. Huon will send investors further details on the JBS scheme, including an independent expert’s report, in approximately four weeks.

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