Decline
Prior to 1974, Tooth relied on a handshake agreement with its interstate rivals that they would not intrude in each other's territories, while Tooth's hotels were tied, meaning licensees were bound to market Tooth beers.
Both of these practices would be outlawed under the Trade Practices Act in 1974. Tooth appointed McKinsey & Company to review its procedures, which was headed by Fred Hilmer, a strong advocate of free competition.
Following the review, Tooth made a number of structural changes; McKinsey generally followed the Harvard Business School of thought that the company should use external consultants for its non-core activities. Between 1975 and 1980, Tooth made numerous acquisitions, two of which were catering firm Wright-Heaton and Budge Refrigeration.
In 1975, Tooth reconstructed the brewing facilities at Irving Street, Sydney, which was funded from cash flow. Between 1976 and 1982, Tooth and Co owned Penfolds winery. As indication of the conservative financial status of Tooth, the acquisition was funded by tightening credit terms with the hoteliers from 90 days down to 30 days. Penfolds was later acquired by Southcorp Wines.
Tooth saw the weakness in its financial position, and took some action to avert being a takeover target. It attempted a reverse takeover of LJ Hooker, so as to acquire Hooker's expertise in managing the land holdings; the takeover failed.
In 1981, a controlling interest in Tooth and Co was acquired by David Jones, then a division of the Adelaide Steamship Company, a corporate raider and asset stripper. In 1983 Adelaide Steamship Company sold the brewing interests to Carlton & United Breweries.[10] Subsequently, Victoria Bitter, Fosters, Cascade Light and Stirling Light were then brewed at Kent Brewery. Adelaide Steamship Company's acquisitions were funded by huge borrowings, and the group had high debt levels (gearing). With the onset of the recession of the early 1990s, interest rates rose.
Under the pressure of its debt, Adelaide Steamship Company was forced to liquidate all tangible assets, although its bankers had agreed to an orderly sale. The disposal started in 1991, and concluded on 24 December 1999 when Adelaide Steamship Company, under its new name of Residual Assco Group Limited, was delisted.
With the disposal of assets, various member companies of Adelaide Steamship Company were renamed. David Jones was renamed DJL Ltd prior to the relisting of the department stores as David Jones in 1995. The Adelaide Steamship Company was renamed Residual Assco prior to the listing of AdSteam Marine in 1997. The owners of Dextran, and hence IEL, were now called Residual Assco, DJL and Tooth, and still share the tax liability. Pending the outcome of the taxation ruling, the three companies remain in limbo. The matter continued to grind on in the courts, as in December 2007 IEL were given leave to appeal the Australian Taxation Office ruling,[11] with the matters being completed by 2010.
Tooth, as a listed company, had to publish an annual report. Each year the three companies (Residual Assco, DJL, and Tooth) went through the formality of an Annual General Meeting.[12] The meeting in regard to the three worthless companies takes about twenty minutes; on the basis of a comparison with three witches huddled over a cauldron, analysts and the press named the three companies the three ugly sisters.[13] Tooth and Co was delisted from the Australian Securities Exchange in February 2010.[14]
