Kerry Stokes no longer ‘Little Kerry’

Seven Group Holdings executive chairman Kerry Stokes. Picture: David Moir

The ‘other Kerry’ is making an entirely opportunistic offer intended very precisely to not take over the building materials group Boral.

If nothing much changes, not only will he ‘succeed’ in that ambition, he’s likely to succeed in not getting very many if indeed any Boral shares at all.

He’s offering $6.50; the Boral board released the required independent valuation Thursday which valued Boral at between $8.25 and $9.13 a share.

Apart from the specific unwisdom of selling a share worth at least $8.25 for only $6.50, there’s a more general disincentive to turning any holding into cash: what do you do with the money?

Zero interest rates and trillions of dollars sloshing around the world looking for a return, any return, have put spectacular premiums on any and all asset values: shares and property.

It only makes sense for an asset owner to sell if they are offered a spectacularly attractive price.

A lot of commentary has had trouble catching up with this reality; ‘normal’ premiums don’t – should not – cut it.

Now we used to call him ‘Little Kerry’ – Kerry Stokes, who’s mostly over on the other side of the continent in Perth - to distinguish him from ‘Big Kerry’, the late father of James, Kerry Packer, who was mostly in Sydney and in Park St in particular and occasionally in Las Vegas having a ‘whale’ of a time.

Seven Group Holdings executive chairman Kerry Stokes. Picture: David Moir

The ‘Little Kerry’ was not intended as a put-down, simply that ‘Big Kerry’ was the big public presence in media; with Stokes coming new into the business and coming in small.

Indeed, when ‘Big Kerry’ was still intimidating the pollies, and everyone else, in the late-1980s and early-199s, ‘Little Kerry’ was making his first foray into media.

He picked up the Canberra Times in the great shuffling of media ownership sparked by the late Robert Holmes a Court’s play for the old Herald & Weekly Times.

Now, in 2021, the ‘other Kerry’ seems more appropriate – especially, as he’s less and less a minor media mogul version of ‘Big Kerry’, and also in terms of where his (billion or more) dollars are.

Yes, this ‘other Kerry’ has an all-but total grip on major media in Perth, controlling both the West Australian monopoly newspaper in Perth and the Seven FTA-TV station – which has been unchallenged in that market for over half-a century – as of course part of the broader Stokes-controlled Seven FTA Network.

But the main business of the Stokes family and certainly where the real dollars are, is industrial services, with the – starting point – billion dollar-plus 23 per cent billion dollar stake in Boral the centrepiece of both corporate and business development activity.

Under the takeover rules, because their Seven Group owns more than 20 per cent of Boral (and has one director on the board, Kerry’s son, chief executive officer Ryan Stokes) it can only buy 3 per cent of Boral every six months – unless it makes a formal takeover offer.

Stokes is doing what he’s always done: try to fast-forward such purchases.

By making an offer around – even under - the market, he was aiming to get more than 3 per cent quickly but nothing like 100 percent.

Seven has to accept all shares offered, but it’s openly on the record as wanting to move from 23 to only around 30 per cent.

It’s not just perfectly legitimate, it’s entirely unexceptional.

Nobody is forcing any Boral holder to sell into the offer and clearly few if any will – unless and until he raises it, as he’s also perfectly entitled to do.

If he did end up at 30 per cent, he would have no more control than he does now; he would just ensure that his Seven Group would get a bigger share of Boral’s future, and likely keep creeping higher.