Two deals are good for nation
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.