Rural Equities accepts Webster takeover offer for stake in Tandou
By Jonathan Underhill
May 13 (BusinessDesk) - Rural Equities, the farming group majority-owned by the Cushing family, will sell its 6.4 percent stake in ASX-listed Tandou into a takeover offer from Australian agricultural and water company Webster.
Webster's shares have jumped 26 percent on the ASX this year and the stock is rated a 'strong buy' based on a Reuters survey of analysts.
Webster is Australia's biggest vertically integrated producers of walnuts, accounting for more than 90 percent of the nation's export crop. It has been on an acquisition spree, buying water entitlements and more than 45,000 hectares of land known as the Kooba aggregation for A$116 million in December and making an A$124 million offer for Bengerang, a large-scale NSW cotton farmer with its own portfolio of water entitlements. Tandou, which listed on the ASX in 1987, owns about 143,000 ha of land and cropping, water and pastoral operations.
Rural Equities "will become a shareholder in an enlarged Webster group which will be one of the largest water entitlement owners in Australia and a high quality producer of cotton, cereals and walnuts," said deputy chairman Rodger Finlay. "The new organisation provides increased scale together with enhanced crop and geographic diversification.”
Finlay said Hawkes Bay-based Rural Equities would end up with between 2 percent and 4 percent of the enlarged Webster, with the deal still subject to approval from Webster shareholders and with the Bengerang acquisition, also funded via the issue of Webster shares, still pending.
Rural Equities paid about 45 Australian cents for its Tandou stake, which it built in conjunction with the Cushing family in 2013, before lifting the holding to 21 percent last year by participating in a rights issue, only to sell down the holding to its current level to fund other activities including debt repayment. Tandou shares were last quoted at 66.5 Australian cents on the ASX.
"Based on the current Webster share price and exchange rate, the takeover offer values REL’s Tandou shares in excess of $3 million over REL’s book value," Finlay said. Post the acquisitions, Webster may be a large enough company to be included in the S&P/ASX 200 or 300 indexes, he said.
Tandou was the subject of a takeover bid by Guinness Peat Group in 2009 and 2010, in an offer the target company then said was an attempt to take control “on the cheap.” GPG sold its stake in 2013 for A$12.8 million, or 36 Australian cents apiece.