By Michael Rafferty
The current takeover bid by Campbell Soups for biscuit manufacturer Arnotts has raised a number of perennial questions about ownership of what are called "Australian" companies. Campbells is being posed as the foreign transnational and Arnotts the local family company producing cultural icons in the form of dry and sweet biscuits. It is almost as if a change of ownership will result in a change in the taste of the biscuits.
Does it make a difference which group of capitalists own companies and, if so, why? In order to answer this question it is worth looking at the recent history of Arnotts.
Campbells Soups' involvement in Arnotts can be traced back to around 1985. At the time Arnotts was fearful that Bond Corp was positioning for a takeover bid. A plan was hatched to keep Bond Corp at bay. The plan required finding a friendly shareholder to mop up any available shares. Arnotts needed a "white knight". Enter Campbell Soups.
A deal was done to help Campbells enter the Arnotts share register. Initially, Campbells moved to a 20% shareholding. This was later increased to about a 40% stake.
The deal also involved Campbells providing local management support to Arnotts as well as marketing advice for export moves. Apparently there was an agreement in 1985 that Campbells would not move to a majority ownership.
At least two things have now changed — the global recession and Arnotts' apparent lack of export marketing success. As with all recessions, industries and companies are experiencing more intense competition. Battles over profitability and market share are reflected in increased marketing effort and restructuring of production. Also, during recessions the tussles between companies for ownership and control of particular firms often increase.
Those companies that are underperforming often fall by the way. This happens either by such companies going into receivership or by being taken over. It is one of the ways that through recessions the preconditions for a new boom are erected.
For at least two decades in Australia these forces of restructuring have had a particularly obvious international dimension. During a previous international downturn in the late 1960s and early 1970s, many companies in Australia were subject to takeover attempts from international firms.
Opposition to the "selling off of the farm" became widespread. Starting with the establishment of the Foreign Investment Review Board by the Liberal-Country Party, successive federal governments in the 1970s erected various barriers to the overseas takeover of local firms.
On the back of this opposition a new raft of "Australian" companies emerged to snap up many old underperforming companies. The origin of capitalists such as Alan Bond, Robert Holmes a Court and John Elliott can in part at least be traced back to this period.
There is therefore more than a little irony in the current situation: efforts to keep one of these local types out of Arnotts in the mid-1980s have led to the current involvement of Campbells.
The battle for Arnotts is mainly a contest between different groups of capital owners and not much more. Inserting the nationality of the owners or the "Australianness" of the biscuits into the question can only muddy the waters.
The interest of workers in one owner against another is hard to discern. Whoever ends up winning this battle will be subject to a requirement of all firms under capitalism — that management must help to pump more profits out of those who make the biscuits. Workers at Arnotts are likely to be the main losers either way.