Elders' sandalwood asset sale upsets rival
Elders has agreed to sell Indian sandalwood plantations in Western Australia's Ord River region to Santanol for an undisclosed sum.
It is thought Santanol, an owner and manager of sandalwood plantations, will pay $70 million for trees in 15 managed investment schemes.
Investment firm Hamilton Securities is putting together a proposal of its own to acquire the sandalwood assets but is not in a position yet to submit a proposal.
The agreement between Elders and Santanol is subject to the approval of growers in Elders' sandalwood investment schemes. They will vote on the Santanol proposal on March 14.
"It just feels like a shotgun wedding," Hamilton Securities executive director Giles Craig said, adding the Santanol proposal undervalued the assets.
Elders is in the process of exiting from or selling all its assets and is unlikely to have any ongoing business activities after this year.
Mr Craig expected the growers' vote later this week to be close.
"All we can do is say: if you [the growers] want to accept the bird in the hand, then do so but recognise it is a very small bird," he said.
Hamilton Securities will not proceed with its proposal if growers vote in favour of the Santanol offer.
"The Santanol transaction represents the most attractive option and best available option for growers to realise value for their project trees," Elders said.
Frequently Asked Questions about this Article…
Elders has agreed to sell its Indian sandalwood plantations in Western Australia's Ord River region to Santanol. The exact sale price was not disclosed, and the deal is subject to approval by growers in Elders' sandalwood investment schemes.
The transaction price was not officially disclosed. Media reports in the article indicate Santanol is thought to be paying about $70 million for the trees across 15 managed investment schemes.
Growers in Elders' sandalwood investment schemes will vote on the Santanol proposal on March 14. The sale is conditional on growers' approval, so their vote will determine whether the Santanol transaction proceeds.
Hamilton Securities is an investment firm that is putting together its own proposal to acquire the sandalwood assets. Its executive director, Giles Craig, described the Santanol offer as a 'shotgun wedding' and said the proposal undervalued the assets. Hamilton is not yet in a position to submit a formal proposal.
No. Hamilton Securities has said it will not proceed with its rival proposal if growers vote in favour of the Santanol offer.
Elders stated the Santanol transaction 'represents the most attractive option and best available option for growers to realise value for their project trees.' The company is also in the process of exiting or selling all its assets and is unlikely to have any ongoing business activities after this year.
According to the article, growers must weigh the Santanol proposal—described by Elders as the best available option—against the possibility of a rival offer from Hamilton Securities. Hamilton cautioned the Santanol offer may undervalue the assets, saying accepting it could be like taking 'a bird in the hand' that is 'very small.' Growers' vote on March 14 will decide the outcome.
The article notes that Hamilton Securities is preparing a rival proposal to acquire the sandalwood assets and has indicated it would pursue that option unless growers approve the Santanol offer. Beyond that, no additional next steps were specified in the article.
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