March 29, 2023

DealBook: Australian Billionaire Threatens to Dump Fairfax Media Stake

HONG KONG — The Australian mining billionaire Georgina Rinehart has threatened to sell her recently acquired 19 percent stake in Fairfax Media, sending shares in the Australian publisher tumbling on Tuesday.

The announcement is the latest volley in her battle to win seats on the board of the company, which publishes leading newspapers including The Sydney Morning Herald, The Australian Financial Review and The Age. Mrs. Rinehart, who is known as Gina, is the richest woman in Asia.

Fairfax proposed a dramatic restructuring on June 18 to address several years of declining circulation, including plans to cut 1,900 jobs, or about 20 percent of its work force, over the next three years. On the same day, Mrs. Rinehart’s privately held Hancock Prospecting said it had increased its stake in Fairfax to 18.7 percent from 12.6 percent.

Despite several months of campaigning for board representation at Fairfax, however, Hancock has been denied a seat and has so far resisted calls to sign a pledge to maintain editorial independence at the publisher.

Hancock “had hoped that Mrs. Rinehart may be viewed by the board as a successful business person and a necessary ‘white knight,’ ” the mining company said on Tuesday in a letter posted on the Web site of the government-owned Australian Broadcasting Corporation.

“However unless director positions are offered without unsuitable conditions, Mrs. Rinehart is unable to assist Fairfax at this time,” Hancock said in the 11-page letter. In response to the denial of board representation, Mrs. Rinehart’s firm said it “may hence sell its interest, and may consider repurchasing at some other time.”

Shares in Fairfax closed down 3.5 percent on Tuesday after the statement from Hancock, closing at 55 Australian cents apiece, their lowest close since listing in 1992. The stock is down 23.6 percent this year.

The moves at Fairfax by Mrs. Rinehart — who in March was ranked No. 29 on the Forbes list of the world’s richest people, with a fortune of $18 billion — come amid one of the biggest shake-ups in Australian media in recent history.

Last week, the Australian arm of Rupert Murdoch’s News Corporation offered 1.97 billion Australian dollars ($1.98 billion) in cash in a takeover bid for the Sydney-listed Consolidated Media Holdings, controlled by the Australian casino and media magnate James Packer.

Mr. Murdoch’s News Limited, publisher of leading newspapers including The Australian, The Daily Telegraph and The Herald-Sun, said the deal would give it control over two of the country’s leading pay television businesses, Fox Sports Australia and the subscription cable television business Foxtel.

Mr. Packer, a billionaire who also invests in casinos in Australia, Macau and London, said the offer was “fair” and that he would support it, absent a higher cash offer.

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Coca-Cola and PepsiCo Race for Greener Bottles

Now, they are fighting over green: The beverage rivals are racing to become the first to produce a plastic soda bottle made entirely from plants.

But despite dueling announcements claiming technological breakthroughs, consumers should not expect to see many all-plant bottles on store shelves any time soon. Neither company is confident enough in the technology to say when, or even if, they will be able to deliver on their environmental ambitions.

Coke delivered the latest volley on Thursday, saying it plans to work with three companies that are developing competing technologies to make plastic from plants, with bottles rolling out to consumers in perhaps a few years.

PepsiCo is aiming to beat that timeline and claim the 100 percent green label first. The company declared in March that it had cracked the code of the all-plant plastic bottle, and on Thursday, it said that it was on schedule to conduct a test next year that involved producing 200,000 bottles made from plant-only plastic.

But until Pepsi conducts the test, executives said they would not be able to predict when large-scale production of such bottles might begin. If the test fails to prove that the technologies favored by Pepsi are cost-effective at a commercial scale, more experimentation will be needed, said Denise H. Lefebvre, the company’s vice president for global beverage packaging.

“The test is very important in really determining efficient cost and manufacturing processes,” Ms. Lefebvre said. She said the company was still working out details of the test, including what products to sell in the all-plant bottles and what type of plant materials to use to produce them.

Coke was the first out of the gate in the green bottle race, when in 2009 it began selling Dasani water in the United States in bottles made with up to 30 percent plant-based plastics. (In some cases, recycled plastic may decrease the plant-based amount.)

On Thursday the company said that by 2020 all of its plastic bottles would meet the 30 percent plant-based standard.

But the company was more cautious about when it could start selling beverages in bottles made entirely from plant materials. “We will set the target once we have the commercial technology in place,” said Scott Vitters, the general manager of Coke’s plant bottle packaging platform.

One of Coke’s new partners, Virent, a Wisconsin-based biofuel and chemical company partly owned by Cargill, Shell and Honda, said it hoped to have a large-scale plant to produce plastic for beverage bottles up and running in 2015.

Mr. Vitters would say only that some commercial production of 100 percent plant-based plastic bottles was achievable “in the next few years.” The exception is Coke’s Odwalla juice brand, which already uses all plant-based material to make a type of plastic suitable for juices.

The two other companies working with Coke to develop the all-plant soda bottles are Gevo and Avantium.

Ms. Lefebvre said that Pepsi was following a similar path to the one Coke announced Thursday, teaming up with companies that are developing different ways of solving the plastic puzzle. But she declined to identify the partners.

Soda bottles are made from a type of plastic known as PET, which commonly has two main components. One, called MEG, makes up about 30 percent of a bottle’s weight, and is what Coke has been producing from plant sources, using sugarcane grown in Brazil.

The other component, called PTA, makes up 70 percent of a bottle’s weight. Scientists have been able to make PTA from plant materials in the laboratory but pulling off the same trick on an industrial scale has proved more difficult.

Mr. Vitters said that production capacity for MEG, used in the 30 percent plant bottle, was poised to increase drastically. The material is produced in only one facility today, but at least two additional factories are expected to begin production next year.

Allen Hershkowitz, a senior scientist at the National Resources Defense Council, an environmental group, said that the production processes involved in creating plastics from plant sources generated smaller amounts of greenhouse gases, which contribute to climate change, when compared with plastics made from petroleum.

But he said the source of the plant materials was important in assessing the environmental impact.

Mr. Hershkowitz said that using agricultural waste products, like corn stalks or other materials left over from farming, was better than using crops, such as sugarcane or corn that are grown specifically for plastic production.

Growing crops for plastic “causes a lot of land conversion, it affects the price of food, it uses a lot of fertilizers,” he said.

Pepsi has said it will use agricultural waste products, such as corn husks, pine bark or orange peels, to make its plastic bottles. Mr. Vitters said that Coke might use a variety of materials, including wastes and crops grown for plastic production.

Regardless of how they are produced, Mr. Hershkowitz said that plant-based plastics still create litter and solid waste problems. He said companies like Coke and Pepsi should endorse legislation that would require the food and consumer products industries to finance recycling operations, in order to greatly increase plastic recycling.

Both Coke and Pepsi have broad initiatives to make their operations more environmentally friendly, taking steps to cut back on factors such as water and energy use.

But the companies played down the potential marketing benefits inherent in being the first to the market with an all-plant bottle.

“We don’t feel it’s a race” Ms. Lefebvre said. “We feel like were all working together to do better for the environment and also to make good business sense.”

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