The $2bn-plus Baiada Poultry is the latest food producer being discussed in the consumer space, with suggestions that the company’s family owners may be weighing its options, including a sale.
Sources believe that advisory firm Rothschild has been working with the company, which may consider options such as an initial public offering, a sale to a major industry or private equity player or a sale and leaseback of its lucrative real estate portfolio.
It follows suggestions that private equity has been running the ruler over Baiada’s listed rival Inghams Group.
A sale or float would be a major milestone for the wealthy Camilleri family owners after the company has been in family hands since Celestino Baiada founded the business after moving to Australia from Malta in 1916 and branching out in NSW as a poultry farmer.
According to The List, produced by The Australian and featuring Australia’s Richest 250, Baiada’s John Camilleri and his family are worth $1.39bn.
Today the company is one of the country’s two largest poultry producers with Inghams, operating throughout Australia with 5150 people and generating about $1.8bn of annual revenue.
The understanding is that opinion has always been divided within the family as to whether Baiada should be sold, but market experts say it is the most attractive poultry company in Australia right now.
With Inghams, Baiada accounts for almost half of the industry’s revenue in Australia, with demand for organic and free-range poultry supporting industry expansion.
Inghams was also previously family-owned until its sale to private equity firm TPG Capital in 2012 for $900m.
TPG floated the business in 2016 after it sold its real estate for about $300m with shares pricing at $3.15 each and its market value at $2.2bn.
IBISWorld says that the industry revenue is expected to rise at 1.9 per cent annually.
Poultry producers are facing headwinds right now with higher feed costs due to the war in Ukraine restricting grain exports and this comes after recovering from labour shortages and higher logistics costs linked to the pandemic and problems with flooding across Australia’s east coast.
The situation is reflected in the share price of Inghams, which closed at $2.89 on Friday and is trading below its listing price.
Also challenging for poultry producers is that their main customers are supermarkets Woolworths and Coles, which drive a hard bargain when it comes to price.
But the Ukraine war with Russia has created fears of a global food shortage and protein is heavily sought after.
Singapore is said to be short of poultry at a time that Malaysia has paused poultry exports.
Among the parties that have been looking at acquisition opportunities in the poultry space is BGH Capital, the Melbourne-based private equity firm of former TPG Capital executives Ben Gray and Simon Harle.
It purchased the smaller poultry producer Hazeldenes last year for at least $400m.
Hazeldenes is dominant in Victoria and Baiada has sold its plant in Victoria, which could pave the way for a deal from a competition perspective.
Other buyers of companies like Baiada could be companies such as Cargill or JBS, while Pacific Equity Partners is worth not forgetting about, given it previously owned NZ poultry company Tegel Foods.
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