The Huon Aquaculture Group Ltd (ASX: HUO) share price is down after a large shareholder has thrown a spanner into the takeover of Huon by JBS.
Huon takeover by JBS
On 6 August 2021 Huon announced that it had entered into an agreement to be taken over by JBS for $3.85 per share.
The agreed price is 38% higher than the $2.79 share price on the last trading day before the announcement.
Huon said that its directors, including Huon’s founders, intend to vote in favour of the deal. This represents around 53% of Huon’s shares.
Andrew Forrest’s investment in Huon
Andrew Forrest, best known as the chairman of Fortescue Metals Group Limited (ASX: FMG), has a substantial holding of Huon shares through his private investment company Tattarang.
Tattarang began buying Huon shares in June 2021 and continued to buy through July 2021. After the takeover was announced on 6 August 2021, Tattarang made two more large purchases totalling around $44 million.
After Tattarang’s latest share purchases it now holds of 18.51% of Huon shares and the voting power.
Holding Huon (and JBS) accountable
Andrew Forrest is becoming well-known for his commitment to the environment and green initiative targets with Fortescue. It is no surprise that Tattarang also has strong values in its environmental policy.
Andrew Forrest said: “Our investment in Huon represents a clear commitment to achieve the industry change we want to see.
“We must all rise to the biggest challenge of Australia’s agricultural sector – food security and sustainability. Sustainability is the one factor that will guarantee jobs in agriculture, food on our plates and farming practices that protect the planet, not harm it.”
Letter to JBS and Huon
According to the Australian Financial Review, Andrew Forrest said “We have written to JBS and Huon that we certainly will not stand in the road of them acquiring Huon, provided that they adopt a very firm arrangement that they will go ‘no pain no fear’ through their livestock processing and adopt the measures which Tattarang had planned to remove the environmental liabilities from the community of Tasmania.”
Andrew Forrest said that Tattarang is a vitally interested investor in Huon and that the nation deserves to know what JBS’ animal husbandry practices are. He also said that the takeover documentation didn’t mention environmental and animal husbandry at all and that it’s a “very serious omission”.
My thoughts and the Huon share price
ESG investing is becoming a more prominent factor for investors. The environmental side of things is becoming something that businesses can’t ignore, as customers are also growing more conscious and ‘voting with their feet’ to support more environmental choices.
According to the AFR, Tattarang’s 18.5% stake in Huon is big enough to block the takeover.
Andrew Forrest’s wording is vey strong, it sounds like it is an ultimatum to Huon and JBS. He also isn’t motivated by money with this undeniable level of impact investing, so it’ll be interesting to see how this plays out.
I am supportive of ethical investing and like what Fortescue is doing with its 100% green targets.
I think it’s fantastic that more wealthy investors like Andrew Forrest are leading the environmental charge. Hopefully it will continue to help plant the seed in the business world to have strong environmental and ethical policies.
For Huon shareholders though, it might not feel so great. The Huon share price is down around 2% at the time of writing. However, if Huon and JBS can agree to tighten up their practices, then it could turn out to give the food they produce more appeal to the growing number of conscious consumers.
Ethical investing is continuing to grow and as investor I believe it’s important to keep in mind. I don’t want my investments to get left behind with the times, so I am always considering ethical share ideas.
