Goldsmith in row over merger

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Sir James Goldsmith has become embroiled in a proposed pounds 400m Australian merger, attempting to scupper the marriage of one of the country's leading agribusiness companies with a building products and automotive parts manufacturer.

His investment company, General Oriental Investments, has built a 5 per cent strategic stake in Elders Australia, a meat and grain business, and intends increasing that holding to block the agreed merger of the company with Perth-based Futuris.

Futuris holds 30 per cent of Elders and plans to create a diversified conglomerate with more than A$1bn (pounds 530m) of assets and a market capitalisation of around A$750m. Sir James believes there is little in common between the two companies and says the merger includes no premium for control of Elders.

Toby Brown, who heads up General Oriental's Pacific arm said: "We see no synergies whatsoever between manufacturing automobile air conditioning equipment, household china and bricks and what Elders does now." Sir James, who started buying into Elders in March, believes the burgeoning market for meat and grain in Asia will turn the cycle in agribusiness from its current doldrums to an export boom focused on Asia.

Futuris said yesterday it was unconcerned by opposition to its merger proposals from the British businessman. Allan Newman, who is managing director of Futuris and chairman of Elders said: "I'm very interested to see what he wants to do. I'm looking forward to seeing this person with a strong international reputation, who is a bit of an icon in my mind. Someone that I would respect greatly. I'm looking forward to seeing if he has the will to go ahead".

Asked if he believed Goldsmith would be able to block the merger, Newman said: "Anybody with a will to block it, could block it. The question is really whether he has an alternative formula for the future of Elders".

"If it's going to be a tussle to find out what's in the best interest of Elders, I couldn't have picked a better opponent. I think it is a wonderful recognition of a wonderful asset." Newman said he had no idea if Goldsmith had lifted his holding in Elders beyond 5.01 per cent this week and said Futuris had not lifted its shareholding.

Analysts think Sir James will have to build a shareholding of around 15 per cent and get institutions to oppose the plan to successfully block the merger. It needs majority approval and some investors are known to be luke warm to the deal.