GPG ups offer for listed Australian farmer Tandou; looks to rationalise its assets

Tuesday 16th February 2010

Guinness Peat Group, the investment group nursing an unprofitable threadmaker in Europe, has fattened its offer to shareholders of Tandou, the listed Australian farmer it aims to break up to extract greater returns from its water rights.

GPG is offering 33 Australian cents a share for the 80% of Tandou it doesn’t already own, a 4.5% premium to its last trading price. The offer is up from 30 cents-a-share made four months ago, for half of Tandou, which garnered less than 1% acceptance from shareholders. At the time Tandou advised shareholders that GPG was trying to take control of the company “on the cheap.”

The cotton, grain and fruit business situated in a former lake bed, 140km southeast of Broken Hill, has been the target of GPG for the past year. At its current share price of 31.5 cents, the company has a value of A$28 million.

“Tandou is a company that has had a very poor track record in terms of delivering value to shareholders,” GPG executive director Gary Weiss told Australia’s National Rural News. “We think it needs a strong proprietary influence, which we see GPG providing, and the strategy we have in mind is that the company should continue to realise its assets and return the proceeds to shareholders.”

GPG’s offer document states that if successful with the bid, it will review and evaluate Tandou’s assets and operations, and that Tandou would be removed from the official list of the ASX. GPG’s offer to Tandou shareholders has no time limit.

“GPG expects, subject to this review, to either sell, restructure or close Tandou’s horticultural and other peripheral activities not producing an economic return to shareholders and to explore all avenues to maximise Tandou’s remaining water assets,” said the offer document.

Water trading in Australia is big business, with a multitude of regulations across states and districts. Last year $2.5 billion of water changed hands in the Murray Darling Basin alone, and the Business Council of Australia has called for a centralised trading platform modeled along the lines of the ASX and share trading.

Businesswire.co.nz

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