Corporate Australia's family connection

Family businesses can morph into something unexpected regardless of whether they stay in private hands, become a showstopper on the stock exchange or the subject of takeover after takeover.

The beginnings of corporate Australia can be traced back to family business. Many of Australia’s biggest companies started out as family businesses. They started out as small family projects and slowly became multi-billion machines, barely recognisable from their beginnings as they expanded into markets that they had never envisaged when they started. It’s a lesson for family business owners -- you’ve got to start somewhere.

Coles:  The first Coles store opened its doors on April 9, 1914 in Smith Street Collingwood. The founder of the business was George James, or GJ Coles. From 1914 to the 1970s, the business was run by the brothers Sir George, Sir Arthur,  Sir Edgar, Sir Kenneth and Sir Norman -- known by their first initials -- GJ, AW, EB, KF, NC. From these humble beginnings the “nothing over a shilling” store grew to become Australia's second largest retailer with more than 2200 retail outlets including Coles and BI-LO supermarkets, First Choice Liquor, Liquorland, Vintage Cellars and Coles Express. Wesfarmers bought Coles for $22 billion in 2007. The hundreds of descendants of George Coles gained next-to-nothing from the sale.

Dymocks:  The bookstore’s beginnings hark back to 1879 when young William Dymock set up a bookstore in Market Street, Sydney. The business grew and the Dymock family moved to bigger premises, purchasing the site of the old Royal Hotel in George Street. Dymock died aged 39, unmarried and childless so the business went to his sister Marjory who was married to John Forsyth. Dymocks has remained in the Forsyth family ever since with franchise operations in Australia and Hong Kong.

Ansell:  The safety supplies and work wear business was inspired by a condom machine. Eric Norman Ansell, born in London in 1878, worked as a traveller then as a mechanic at the Dunlop Pneumatic Tyre Company. Ansell was called in to dismantle a condom-making machine at Dunlop in 1905 when the company decided to stop production. He saw the opportunity and set up the machine in his rented house. The business expanded and Ansell's two sons, Lloyd and Harvey, joined the business. They ran Ansell for more than 40 years. Ironically Dunlop Australia (formerly Pacific Dunlop) bought Ansell, a small company at the time, in 1969 for a tiny sum. Lloyd retired but Harvey stayed on as chairman for a few years, working with then newly appointed managing director Ian Dicker. Ansell The irony was compounded when the company changed its name to Ansell in 2002. It has a market cap of $2.9 billion.

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Red Rooster:  Red Rooster was set up by the Kailis family, who came to Australia from Greece in 1917. George Kailis set up business interests in Western Australia and his son Peter founded Red Rooster in 1974. The Kailis family ran and owned the business until the early 1980s until they sold it to Coles Myer. Red Rooster acquired the chicken chain called Big Rooster in 1992, which was founded by brothers Phil and Nick Tana in the 1970s. These stores were on Australia’s east coast, predominantly in Queensland. Coles Myer sold Red Rooster to Australian Fast Foods in 2002. It changed hands again in 2007 when Australian Fast Foods managing director Frank Romano and key managers teamed up with the Quadrant Private Equity to buyout Red Rooster and its Western Australian cousin, Chicken Treat, for $180 million and run the business as Quick Service Restaurant Holdings. Archer Capital bought Quick Service Restaurants for $450 million in 2011.

David Jones: Welsh merchant David Jones opened his first store in Sydney in 1838 opposite the post office with the aim of selling the best and most exclusive goods. The business did well and survived the Depression of the 1840s. He retired in 1856, leaving it to the management of his partners but the business faltered. Faced with bankruptcy, he returned to manage it and with the help of new partners and his son Edward Lloyd Jones, he paid off all the creditors. Edward Lloyd Jones travelled extensively overseas and came back with the European idea of a “department store”. From 1838 until 1980, a Jones had led the oldest department store in the world to go on continuously under the same name. John Spalvins’s debt-driven corporate raider Adelaide Steamship Company took control of David Jones in 1980. With the department store undervalued and having trouble with banks, the Jones family lost control after 142 years. When Adsteam collapsed, David Jones emerged from the wreckage in 1995 and was listed at $2 a share, giving it an enterprise value of $750 million that included $200 million of debt. David Jones was valued at $2.2 billion in the Woolworths takeover this year.

Holden: Before it got into cars, Holden started out as a family saddlery in 1856 in South Australia. The business was established by James Alexander Holden and fittingly, the company had the moniker JA Holden & Co. Edward Holden, James’s grandson, joined the business in 1905. He was fascinated by cars and the company started moving in that direction, going into repairs, upholstery and eventually building chassis. By 1926, Holden Motor Body Builders were producing half the national output of cars, supplying bodies for General Motors Australia. The Depression saw a substantial downturn in production and in 1931, General Motors acquired the business. At the time, it was valued at £561,000.

Gunns: Gunns was founded in 1875 by brothers John and Thomas Gunn. Originally, it was a construction company, producing buildings such as St Andrew’s Church in Launceston that still stands today. Gunns erected the first sawmill on the Tamar River in the 1890s. John’s sons, Frederick John Gunn and Frank Lindsay Gunn, ran the business after the death of his death. Fred ran the business from Launceston and Frank moved to Hobart to run the southern part of the business called Crisp & Gunn. Fred’s sons John and David joined the company in the 1940s. The two got on with post-war modernisation and a growing emphasis on timber production. In the mid-1980s, the Gunn family disposed of its interest and the business became a public company with the increased capital permitting its expansion into timber products. Gunns collapsed in 2012 after a $900 million loss with debts of $526 million and total liabilities of $879m, almost the same as its total assets of $903 million. When it entered voluntary administration, the company blamed it on the banks for refusing it permission to keep the proceeds of asset sales to keep the company afloat.

Elders:   The history of Elders goes back to the beginning of South Australia in 1839 when Alexander Lang Elder was despatched by the family business in Scotland to extend its operations to the new province on the other side of the world. He formed AL Elder, a branch of the family company and was joined by his brothers William, George and Thomas. Thomas and his brother-in-law formed Elder Smith and Co in 1863 and the business went public in 1888. The company has played a significant role in Australian history, importing the first 100 Pakistani camels used to help build the Adelaide to Darwin telegraph line. It also made an unsuccessful bid for mining giant BHP in the 1980s.