Mining billionaire Andrew Forrest can recall the exact moment when his passion for marine conservation began. He traces it back to when he was a young boy, camping with his parents along the Ningaloo coastline in the north-west of WA.
“As a kid, I was completely amazed by the stars, and one night I asked my father ‘why are there stars out there on the ocean?” Forrest says. “And he said ‘they’re not stars, they’re boats clearing away everything for the prawn farming industry’.”
“They were literally dredging the bottom of the ocean and clear-felling the coral. And I couldn’t work out why that was a good thing, why did environmental destruction have to go hand-in-hand with business?”
Decades later, Forrest’s perspective hasn’t changed. And now, armed with a PhD in marine biology and an estimated $27.2 billion in personal wealth from his interests in iron ore juggernaut Fortescue Metals, he’s attempting to back up that passion with action. This week, he launched an unexpected challenge to a $500 million tie-up between controversial Brazilian meat processor JBS and Tasmanian salmon farmer Huon.
JBS first lobbed its offer for Huon last Friday, pitching the deal as a growth opportunity for the company which pulls in around $6 billion in annual sales in Australia through its numerous subsidiaries including Primo and Hans.
With Huon’s founders (and 53 per cent majority shareholders) Peter and Frances Bender on side, the JBS proposal appeared a done deal. However, on Wednesday, Forrest’s investment firm Tattarang more than doubled its existing 7 per cent stake in Huon and its billionaire chairman issued JBS a challenge: do better.
Forrest wants the international operator to agree to a raft of improvements at the fisher, including adopting ‘no pain, no fear’ standards when killing livestock, removing the fish content of the fishmeal fed to the salmon, adopting carbon-neutral production and moving its farming operations from Tasmania’s Macquarie Harbour into deeper waters.
“I’ve said to JBS ‘this is how we run our operations, this is the objectives we have for Huon, and we challenge you to meet our standards and objectives not only in Tasmania but all around the world’,” Forrest says.
“I’m delighted I’m in a position where I can be an industry player, albeit a small one, and challenge them to meet those standards.”
However, late on Friday, JBS lobbed an unexpected grenade in the battle for Huon, announcing it would run an off-market takeover bid in parallel to its initial scheme of arrangement, with a goal of acquiring a 51 per cent controlling stake in the business.
This would, in effect, negate any chance of Forrest obstructing the scheme, which requires majority shareholder approval, and may force the mining magnate to show his hand and possibly launch his own, competing bid.
It is unclear what end-game Forrest has in sight after the extraordinary, and unprompted, provocation.
‘Huge matter of angst’ for Tasmanians
Huon Aquaculture began in 1986 in Tasmania’s picturesque Hideaway Bay in the town of Dover, a place considered Australia’s southernmost town of significance – or at least the last one where you can buy petrol and supplies.
The Benders, a husband and wife duo, have run Huon since 1994 and listed it on the stock exchange in 2014, valuing the company at around $500 million. Last financial year, the company sold 25,000 tons of fish, predominantly heads-on, gutted (or HOG) salmon and a small quantity of trout.
The company claims the title of Tasmania’s second-largest salmon farmer, coming in behind fellow listed player Tassal and ahead of private operator Petuna. In total, Tasmania’s salmon industry is a $1 billion-year business, larger than both the state’s dairy and beef industries.
It’s also a highly controversial one. For years, Tasmanian locals have protested the salmon industry’s impact on the state’s iconic natural environment, along with the perceived treatment of the fish themselves. Recently this has come to a head after renowned author Richard Flanagan published a new book Toxic: the Rotting Underbelly of the Tasmanian Salmon Industry.
How about consulting Tasmanians, on the conditions you place? It’s not up to him to, at the last minute, suddenly say ‘here are the environmental conditions for somebody else to buy in’.
Former Greens leader Bob Brown
In it, Flanagan labels Tasmanian salmon as “the battery hen of the sea” and claims fish in farms operated by the big three salmon farmers are fed chicken beaks and offal, carcinogens, and fishmeal containing other “jeopardised” fish stocks. Its release struck a chord among Tasmania’s 500,000-odd populace, turning many locals off salmon and galvanising local green groups into action.
Former Australian Greens leader Bob Brown is one disgruntled local. He tells The Age and The Sydney Morning Herald there is a rising tide of anger against the salmon industry and Huon’s sale to JBS was not being viewed favourably in the community.
“The mood is one of apprehension and disgust that the Tasmanian owners of this company are simply throwing it to international buyers,” Brown says. “We’ve suffered the environmental impacts of industrial fish farming, but now, on top of that, the profits are going to flow out of this state which is just a huge matter of angst for the people of Tasmania.”
Brown says he supports Forrest’s broader goal of challenging JBS to improve its environmental standards but criticises the billionaire for not coming down to Tasmania himself to speak to locals on what changes would be best for the community.
“How about consulting Tasmanians, on the conditions you place? It’s not up to him to, at the last minute, suddenly say ‘here are the environmental conditions for somebody else to buy in’. We have environmental conditions for [Forrest] to buy in.”
Forrest says he’s been unable to visit as he is currently “hammered down” working on Fortescue Future Industries, the company’s green hydrogen and ammonia offshoot. But he has sent experts down to study the local situation and report on Huon’s operations.
‘In walks JBS’
Those operations are, according to Forrest, heading down the right path, and while Huon wasn’t there yet, it was “trying its hardest” to address community concerns and solve some environmental issues associated with salmon farming.
He says Tattarang’s initial 7 per cent stake in Huon, acquired in June, was intended to investigate how he could help turn the company into a standard-bearer for the broader industry.
“We were building up a stake, and we had a conversation with the Benders saying our priority was the environment and animal husbandry, and they were okay with that,” he says.
“And then in walks JBS”.
The Brazilian meat processing giant has a chequered past. Four years ago, it was embroiled in a bribery and corruption scandal which resulted in millions of dollars in fines and put its controlling shareholders in jail. It has also faced claims of slave labour, illegal deforestation links, and queries over its animal welfare practices.
It’s no surprise then that Forrest is seeking commitments from JBS to adopt a “no pain, no fear” approach and to generally improve its husbandry and sustainable practices. He says his stake in Huon now means he can reach out and talk to the company on a strong footing without appearing as too much of a ‘bleeding heart greenie’.
Responding to Tattarang’s challenge, JBS Australia’s chief executive Brent Eastwood agreed with Forrest’s view that good business must also be good for the environment and said JBS had an “uncompromising commitment” to animal wellbeing, with standards that “often exceed” regulatory requirements and industry guidelines.
These standards include the ‘five freedoms’ model: RSPCA-supported guidelines which say animals should be free from hunger, discomfort, pain, and fear and have the freedom to live normally prior to death.
“As a result of our efforts, JBS is recognised as one of the best companies in the world for animal welfare practices,” Eastwood says. JBS will provide further detail on its commitment to best practice standards when it releases the takeover scheme details to all shareholders in late September.
Huon’s chief executive, Peter Bender, also dismissed Forrest’s questions over the company’s practices, saying the business was the only seafood producer in Australia to gain RSPCA-approved farming certification, of which he said there was “no higher animal husbandry goal” and asked Forrest to outline what standards he believed were better.
“If Mr Forrest had bothered to check with me, he would know that our stocking density of maximum 1 per cent fish to 99 per cent water is the best in the world across the global salmon farming industry,” he says.
A takeover battle at heart
Amid all the talk of fish farms and sustainability, it’s easy to forget that at the heart of the discussions between JBS, Huon and Tattarang is a classic corporate takeover battle. JBS wants to buy Huon, and Forrest – with his 18.5 per cent stake – isn’t far away from being able to block the scheme, which requires approval from 75 per cent of voting shareholders.
But JBS’ late move to launch a parallel takeover bid further complicates matters. If it is successful, it will give a controlling stake to the meat processor, dampening Forrest’s efforts to force change at Huon.
Tattarang has recently moved to position itself as somewhat of saviour for Australian brands, most notably buying iconic bootmaker RM Williams from foreign owners last year.
Forrest hasn’t said if he intends to emulate this strategy with Huon, and on Friday rejected suggestions he had increased his stake in the business as a precursor to lobbing his own takeover bid. This could change, however, with news of JBS’ new bid.
Market watchers are unable to make neither head nor or tail of it either, labelling Forrest’s move unprecedented and confusing and also querying why the billionaire would spend $43 million and express so much interest in a company he had not yet visited.
For Forrest, he says his continued investment in Huon was done with the same objectives as his first stake: protecting Australia’s oceans.
“I saw fish farming as a humane and, if it could be, environmentally neutral way of saving the oceans, and that’s why we started to invest heavily into it,” he says. “Ultimately it’s about protecting the oceans or giving an alternative to ripping the life out of them.”
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