Rural Equities' Cushing to meet Tandou bosses after building 17.7 percent stake

Friday 9th August 2013

Rural Equities will meet with the bosses of Tandou in the coming weeks after the local farming group controlled by the Cushing family built a 17.7 percent stake in the ASX-listed agribusiness.

Chairman David Cushing told BusinessDesk the company hasn't considered whether to push for a seat on the Tandou board after Rural Equities bough 11 percent of Tandou for $7.9 million at an average price of about 43 Australian cents, building on the Cushing family's stake.

"We plan to have discussions with the (Tandou) chairman and chief executive in the coming weeks," Cushing said.

The investment aims to piggyback on Tandou's water rights, which Rural Equities sees as underpinning future Australian agricultural production, and Cushing said the acquisition was at a "significant discount" to the company's net tangible assets.

"We think it's a positive acquisition for Rural Equities shareholders" but isn't a "synergies play," he said.

In a statement, Cushing said Rural Equities intends to be a long-term shareholder in Tandou.

Rural Equities owns 27 farms, of which nine are directly managed and the rest leased out. Its shares, which are listed on the Unlisted platform, last traded at $3.90, valuing the company at $139.8 million.

Cushing said the farming group has come through this year's drought in reasonable shape due to its geographic spread across both islands.

Tandou focuses on focussed on large scale production of irrigated cereal crops and cotton, the pastoral production of sheep meat and providing agribusiness services to its customers, according to its website. The ASX-listed shares were unchanged at 50 cents today, valuing the company at A$71.6 million.

The Australian company was the subject of a takeover bid by Guinness Peat Group in 2009 and 2010, in an offer Tandou said was the investment trying to take control "on the cheap." GPG sold its stake earlier this year for A$12.8 million, or 36 Australian cents apiece, as it liquidates its portfolio.

BusinessDesk.co.nz

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