Wesfarmers’ proposed takeover of Kidman Resources is well out of the retail behemoth’s usual modus operandi. Kidman is, after all, a speculative lithium play that (despite already supplying lithium hydroxide to Elon Musk‘s Tesla) is five years away from a profit. So, it’s hardly flogging shovels and buckets at Bunnings.
And if some blue chip institutional investors are jittery about the proposed acquisition, the unconventional history of Kidman chief Martin Donohue won’t give them comfort.
Back in 2003, he was banned from working as a securities dealer or financial adviser, and from providing financial advice, after getting himself into a tricky situation at Shaw Stockbroking. In 2000, when he was in his late 20s, he opened a trading account in his mother’s name through which he began trading without her authorisation. When Shaw informed him in 2002 that the margin collateral in that account wasn’t sufficient to cover its exposure, he forged the signature of his stepmother (who did have a Shaws account) to authorise some of her assets being used as said collateral (making that year’s family Christmas exceedingly awkward). Shaw fired Donohue when it discovered his actions, and the ASIC ban came a year after that.
After this inauspicious end to his trading career, Donohue got into mining. His ban was lifted by ASIC in June 2013, and shortly after he became an executive director at Kidman, building it from a fledging $9 million minnow to Friday’s $776 million valuation in less than five years.
Donohue’s 1.6 million ordinary shares are worth $3.2 million under Wesfarmers’ $1.90-a-share offer. Meanwhile Geoff Kinghorn, son of RAMS founder John, stands to make $25.4 million through his Capri Trading, which is Kidman’s third-largest shareholder.