Forrest weighs up meat processor

Fortescue executive chairman Dr Andrew Forrest.

It turns out it was not just foreign investors who had been lining up to buy the meat processing business owned by Teys and Cargill – Andrew Forrest was there as well.

Apparently, Dr Forrest, the billionaire founder and boss of Fortescue Metals, was among the parties taking a look at the operation, along with Kilcoy Pastoral and Minerva and Marfrig out of Brazil.

Things all came to a head just over a week ago, with Marfrig understood to be the last party standing in the competition after its Brazil rival, Minerva, was earlier expected to be close to acquiring the business.

But as earlier reported by DataRoom, Teys and Cargill opted to retain the business that had been subject to a sale process by Bank of America.

Should Dr Forrest have purchased the operation, it would add to his eclectic mix of investment in Australian companies through his private interests, including the country’s largest private renewable energy operator, CWP Renewables, which he purchased last year through his business Squadron Energy, a 17 per cent stake in listed beauty products company BWX, food brands company Bega, a 17.4 per cent stake in the Australian Agricultural Company and clothing brand RM Williams to name some.

He also owns cattle stations which would be complementary to the meat processing operation.

The sale process has highlighted some of the foreign groups (and local investors) who have been looking at agriculture-related assets of late.

Apparently, US-based poultry producer Tyson Foods has been scanning the local market in recent times for acquisition opportunities.

It considered buying the $2bn-plus Australian business Baiada Poultry and was an underbidder on the competition to acquire Australian Lamb Co that sold to Minerva Foods last year for $400m.

Arkansas-based Tyson is the world’s second largest processor and marketer of chicken, beef and pork after Brazil’s JBS.

The understanding is that a price of between eight and 10 times earnings was being sought for the Teys meat processing business.

Teys Australia has a 50-50 beef processing and cattle feeding arrangement with Cargill Beef Australia.

The operation’s largest abattoir is in Lakes Creek Rockhampton behind properties at Beenleigh, Biloela, also in Queensland, Wagga Wagga in NSW and Naracoorte in South Australia.

It has 14 properties overall.

Some believe that the owners did not attract offers that were in line with their price expectations.

It is one of the largest abattoir operations in the country and the asking price was understood to be about $1.5bn.

The asset has been on the market at a time of soaring beef prices, although some are predicting that in the months ahead, meat processors will be squeezed on price.

The Teys family has been in the meat industry since 1946, when its first butcher shop was opened in Queensland.

Cargill provides food, agricultural, financial and industrial products globally.

Data from IBISWorld suggests the Teys joint venture with Cargill generates about $2.4bn in annual revenue, growing at a rate of 0.9 per cent, with $1.1bn worth of assets, growing at 6.4 per cent between 2017 and 2021. Annual net profit was last recorded at $38.5m, according to IBISWorld.