Another Australian company is set to fall into foreign hands, with Brazil‘s Minerva Foods snapping up Australian Lamb Company for $400m.
DataRoom revealed in August that the Victoria-based lamb producer was in final negotiations for a sale to Minerva, and it comes after its Brazilian rival JBS purchased Huon Aquaculture last year and Canada’s Cooke this year bought the country’s largest salmon producer Tassal.
Australian Lamb Co will be purchased through a venture known as MFA, which is 65 per cent owned by Minerva, while the remainder is owned by Minerva’s major shareholder Saudi Agricultural and Livestock Investment Company, a business of Saudi Arabia’s sovereign wealth fund.
The deal is set to close on October 31.
Minerva sells fresh meat and operates in live cattle and meat processing.
It is the second-largest beef company in Brazil and Uruguay and the largest beef exporter in Paraguay, Colombia and Argentina, selling its products to more than 100 countries.
SALIC has directly invested in more than 12 companies globally and has full ownership of Merredin Farms, which operates 211,000 hectares of farmland in Western Australia.
It also has a 30.55 per cent per stake in Minerva.
The purchase of ALC by MFA adds to their existing lamb processing portfolio, which includes two lamb processing plants in Western Australia.
The buyers plan to invest in technology to boost the company’s performance and growth.
It is a large supplier of lamb to supermarket giant Coles, which also has its own branded product with a lamb processing facility in Colac, Victoria and a boning room and marketing hub in Melbourne.
Australian Lamb exports to more than 70 countries.
Its customers include hotels, resorts, restaurants, supermarkets and butchers that purchase from the company’s two licensed facilities in Sunshine, Melbourne and Colac in southwest Victoria.
Australian Lamb was advised by PwC and Holding Redlich while MFA were advised by Ernst & Young and Clayton Utz.
The Verrall family owned the business, which is run by John Verrall and Denis Zarpellon and has more than 800 staff.
Australian Lamb owns brands including Ambassador, Sovereign, 1788 and Everdene Oak.
For the year to June 2021, it generated about $21m of annual earnings before interest, tax, depreciation and amortisation and about $430m of revenue.
However, earnings fell about 26 per cent in the year due to the impact of the pandemic.
Companies selling protein sources are in demand around the world as the conflict in Ukraine with Russia creates food shortages.
IBISWorld says the Australian meat processing industry as a whole generates $23.5bn of annual revenue and $1.2bn of profit, with a 5.1 per cent profit margin.
Lamb and mutton account for about 24 per cent of the market.
Over the past five years, rising export demand has driven up prices.
HMC moves in on Healthscope opportunity
The listed real estate group says all options are on the table for ensuring its major hospital tenant keeps trading.
Privatisation of NZME on cards amid ‘clickbait’ complaints
There are rumblings across the Tasman over the state of New Zealand’s media industry, and some wealthy Kiwis are said to be plotting to do something about it.