The ACCC knows, it’s on its website. Some well read investors have a clue. But that’s as far as it goes.

A
quiet attempt is being made by the listed Ridley Corporation to snaffle
a dominant position in the Australian salt industry, especially salt
used in the high consuming food and industrial markets.

Yep
salt, that stuff that’s supposedly bad for us, is in demand. Ridley
describes itself as “Australia’s largest stockfeed manufacturer and
producer and refiner of salt for the food and industrial markets”.

Now
don’t laugh, salt is a big deal. Ridley sells $30 million of it a year
through its Cheetham Salt subsidiary. It’s sold into the food industry
(potato chips anyone, corn chips) and industrial sectors, such as the
chemical industry, which are also big consumers. Salt in some cases is
a basic feedstock. Much of it is exported to Japan.

But like any
company where executives have bonuses and other rewards tied to share
price and profits, Ridley wants more. A near monopoly or a duopoly
would be nice. So it’s proposed to buy the fairly new salt operations
of Penrice, a South Australia soda products company. Soda products are derived from salt and Penrice has a lot of that.

In
its half year report released in February, Ridley revealed that
earnings before interest and tax from its salt business fell in the six
months to December 2004 by 11% to $9 million. The fall was attributed
to “volume mix” and increased costs in Japan, plus some delayed exports
because of high shipping costs and delays in obtaining charters.

But
there was no mention of the extra competitive pressures coming from
Penrice which was trying grow its presence and was taking on Cheetham
(Ridley) through the tried and true method of a price war. There was
not a mention of the Penrice deal anywhere in the Ridley interim in
February or in the analysts presentation, nor has there been an
official announcement from Ridley on the proposed buyout of the Penrice
salt business. The company’s website is silent, yet the ACCC was told
on 2 March.

The ACCC had to be told because there’s a very large
anti-competitive problem emerging if Ridley is allowed to buy the
Penrice salt business. Australia’s largest producer and refiner of salt
will become even larger and more dominant.

As you can see from
the ACCC timeline, submissions close for interested parties at the end
of March, with a decision a month later. Wouldn’t it be nice for Ridley
to say something to the ASX and shareholders, officially, instead of
allowing a small report in The Australian Financial Review to be the only publicity this potentially anti-competitive deal might have?

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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