Two deals are good for na­tion

The Daily Telegraph (Sydney) - - DT/TV -

TWO very dif­fer­ent deals are both good news for the par­tic­i­pants and even more so for Aus­tralia. This is true even though one was an ex­er­cise in al­most sell­ing the farm, while the other was an ex­er­cise in buy­ing back, if not the farm, what lies be­neath the ocean.

Overnight, Shell sold its re­main­ing stake in one of our great small-guy-made-good com­pa­nies Wood­side.

At one time, Shell owned as much as one-third of Wood­side — nor­mally enough to ex­er­cise con­trol, but it never did, it ex­er­cised (con­sid­er­able) “in­flu­ence” in­stead — and it wanted to go to 100 per cent.

The at­tempt was knocked back in 2001 by Trea­surer Peter Costello as “not in the na­tional in­ter­est” and Shell em­barked on a rather ex­tended jour­ney to sell out, fin­ish­ing this week. Both no­table and pleas­ing, for share­hold­ers, was that de­mand for the Wood­side shares was so strong Shell sold the lot in­stead of its orig­i­nal plan to only sell part of its resid­ual hold­ing.

This re­turns full con­trol of the destiny of one of our two big­gest oil and gas groups to lo­cal hands both in the board­room and on the regis­ter. The other is of course BHP.

Wood­side is the dom­i­nant lo­cally owned and con­trolled player in the off­shore gas fields that run from the north­west WA coast across the North­ern Ter­ri­tory. It’s the only lo­cal player (ex­clud­ing Oil Search in a dif­fer­ent con­text in PNG) that can and has played as an equal with the giants of global oil.

It must be noted that it would never have got there with­out Shell. It cer­tainly nur­tured Wood­side all the way in a 50-year re­la­tion­ship that had to weather some very tough times, im­posed both by mar­kets and govern­ments. In­deed, for a very long time Wood­side op­er­ated as a Shell af­fil­i­ate, with its top man­age­ment com­ing from the oil ma­jor; but im­por­tantly, op­er­ated in a form of “co-op­er­a­tive in­de­pen­dence”.

Pretty much since the Shell knock-back just af­ter the turn of the cen­tury, it’s been fully in­de­pen­dent. One of the most in­ter­est­ing de­ci­sions it made was to re­sist the temp­ta­tion of “un­con­ven­tional” oil and gas — coal seam in Queens­land and shale in the US.

The other deal of note was es­sen­tially the sale of Aus­tralia’s big­gest dairy group Mur­ray Goul­burn to the Cana­dian Sa­puto group.

It’s sub­ject to re­view by the com­pe­ti­tion reg­u­la­tor, the ACCC, but I re­ally want to see it pro­ceed as I think it’s great news — not just for those in and around MG (and that in­cludes con­sumers as well as farm­ers) but Aus­tralia over­all.

On the sur­face it might seem to be lamented: con­trol of an­other im­por­tant part of Aus­tralia’s past and present — and even more our China fu­ture — pass­ing to some “big for­eigner”. In truth, the choice was prob­a­bly only be­tween for­eign­ers — ei­ther Sa­puto or New Zealand’s Fon­terra.

I don’t have any­thing against our Kiwi cousins. But I don’t know that it would have been a great idea to have what is a to­tal NZ mo­nop­oly given a big help­ing hand to­wards be­com­ing a mo­nop­oly or near­monopoly in Aus­tralia as well. I like the idea of two big guys com­pet­ing, both for lo­cal con­sumers, but also in de­vel­op­ing val­ueadding prod­ucts for sale into China — and so ul­ti­mately both greater de­mand and higher prices for lo­cal dairy farm­ers.

That of course was ex­actly the dream of for­mer MG CEO Gary Helou, but which be­came an all-round night­mare and all-but de­stroyed MG and many of its owner-farm­ers.

Sa­puto has two things go­ing for it — and for MG stake­hold­ers. It’s big, with plenty of fi­nan­cial clout and sta­bil­ity; and it’s a fam­ily com­pany to­tally com­mit­ted to dairy.

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