Parmalat circles Harvey Fresh

18 Nov, 2013 08:52 AM
Comments
0
 
Harvey Fresh discussions with Parmalat are said to be well-advanced, although sources close to the situation said a signed deal was still weeks away.
Harvey Fresh discussions with Parmalat are said to be well-advanced, although sources close to the situation said a signed deal was still weeks away.

THE dramatic bidding war for Warrnambool Cheese and Butter (WCB) is proof that for bidders, valuation of Aussie agribusiness assets has gone way beyond fundamental and into the stratospheric realms of strategic.

With this in mind, it will be interesting to see how quickly buyers are re-rating the rest of Australia's dairy sector based on the WCB case. That's because WCB isn't the only dairy asset people for which people are queuing.

In Western Australia, buyers are circling processor Harvey Fresh, which accounts for about a third of the state's fresh milk market. It is believed there is a handful of offshore – mostly Asian – buyers looking at the asset. Italian dairy giant Parmalat is said to be the only party with local operations to have expressed an interest.

West Australian investment firm Pendulum Capital is advising that Harvey Fresh, which is family-owned, generates earnings of between $10 million and $15 million and is expected to fetch more than $100 million. Harvey Fresh started processing juice on 100 hectares of land in the farming community of Harvey, south of Perth, in 1986 and now runs a juice plant, a dairy factory and a winery for the Harvey River Bridge Estate and Joseph River labels.

The company acquired juice processor Nugan Quality Foods in February 2012 for an undisclosed sum, in a bid to capitalise on a "booming export market" for fruit and vegetable juices from Australia into south-east Asia.

But in June this year, Harvey Fresh slashed 15 jobs following a strategic review, blaming deteriorating business conditions.

Discussions with Parmalat, one of three global giants operating in the Australian market alongside Lion and Fonterra, are said to be well-advanced, although sources close to the situation said a signed deal was still weeks away.

Parmalat's last acquisition in Australia was the $70 million purchase of assets from Kirin-owned National Foods in 2009, as part of the latter's Australian Competition and Consumer Commission requirements for its $910 million acquisition of Dairy Farmers. Rothschild is understood to be advising Parmalat.

The Harvey Fresh sale comes as milk processors around the world jockey to take advantage of growing demand for cheese and milk powders, particularly for infant formulas, in Asia.

China's per capita consumption of milk, butter and whole-milk powders has been growing at 5% a year since 2010. Cheese consumption is growing at 3.7%, according to analysis by the Commonwealth Bank released earlier this year.

AFR

POST A COMMENT


Screen name *
Email address *
Remember me?
Comment *
 
The corn harvesting method known as snaplage is emerging from obscurity as more dairy producers and nutritionists recognise its advantages.
04 Dec 14 The corn harvesting method known as snaplage is emerging from obscurity as more dairy producers and nutritionists...
THE use of a new maize hybrid and improved agronomy have combined to lift silage yields on the property of Paul Taylor, Koroop, east of Kerang, Vic.
07 Nov 14 THE use of a new maize hybrid and improved agronomy have combined to lift silage yields on the property of Paul...
light grey arrow
At last a real challenge to the milk/groceries monopoly. When will the milk come to Orange? I
light grey arrow
Hopefully the UDP operations end up back in Australian hands. Love to see Esposito buy it back
light grey arrow
So long as he doesn't fall into the flogging of raw milk and its derivatives. Good luck to him
A PROGRAM that helped Tasmanian farmers reduce their energy costs is now being rolled out across Victoria.
31 Oct 14 A PROGRAM that helped Tasmanian farmers reduce their energy costs is now being rolled out across Victoria.
When Grant Sherborne was 17 he became the first dairyfarmer in the southern highlands district south of Sydney to install a travelling irrigator. 
06 Oct 14 When Grant Sherborne was 17 he became the first dairyfarmer in the southern highlands district south of Sydney to...
AN independent review of the Water Act has focused on cutting red tape and improving Basin Plan performance.4:15 PM AN independent review of the Water Act has focused on cutting red tape and improving Basin Plan performance.
AFTER years of turmoil, the Elders AGM in Adelaide yesterday carried a more comfortable and confident tone.10:35 AM AFTER years of turmoil, the Elders AGM in Adelaide yesterday carried a more comfortable and confident tone.