Scales takes out three Aussie joint ventures for $103m

Agribusiness group Scales has gone to full control of two Australian joint ventures. Photo / Supplied

Scales Corp will pay A$91.05 million ($103.6m) to go to full control of two of its Australian joint ventures and to majority ownership of a third, which it said would lift earnings in its current financial year.

The diversified agribusiness company said it had agreed to increase its holding in its Australian Global Proteins’ joint ventures with the acquisition of 50% of Meateor Australia and 50% of Fayman International and 42.5% of ANZ Exports.

Completion of the acquisitions is due to take place later today.

As a result of these investments, both Meateor Australia and Fayman International become 100% owned subsidiaries and ANZ Exports will be 85% owned, Scales said.

The total acquisition price will be settled by:

• A$49.4m payable in cash payable today.

• A$5.25m payable in Scales’ shares, to be issued in a month’s time.

• A$36.4m payable in five equal instalments over the next five years.

“We are excited to be effectively bringing forward the acquisitions provided for in the existing put and call options between Scales and the Fayman family, to take full ownership of Meateor Australia and Fayman International, and to increase our stake in ANZ Exports,” Scales managing director Andy Borland said.

The businesses had demonstrated both strong performance and good strategic alignment with Scales’ long-term growth objectives.

“Meateor Australia’s progress from start-up to full production has been extremely pleasing,” he said.

“Its manufacturing facility in Melbourne is strategically important to the Global Proteins division, as is the Australian market generally.”

Fayman International and ANZ Exports had exceeded the expectations we had at the time of Scales’ initial investment, he said.

“These businesses play an important role in the edible proteins sector, particularly in relation to Australian exports,” Borland said.

“They are currently capitalising on the strong global beef market, with Australia being a key worldwide supplier.”

Chairman Mike Petersen said the acquisitions reflected Scales’ stated Global Proteins divisional ambition of increasing its joint venture holdings over time.

“We are also pleased to be maintaining our relationship with the Fayman family and look forward to continued growth alongside them,” he said.

Today’s A$49.4m acquisition cost would be funded through Scales’ current cash reserves.

As a result of the acquisitions, Scales is now forecasting a net debt position of $57m as at December 31.

The acquisitions are subject to a “locked box” arrangement, which entitles Scales to earnings from April 1, 2025, from the acquired interests.

Scales revised up its earnings guidance after acquisitions.

It now expects an underlying net profit of $51.0m to $56.0m for the current financial year to December 31, up from a previous forecast of $45-$50m.

Scales’ Global Proteins’ earnings before interest, tax, depreciation, and amortisation target for 2027 lifts from $70m to $85m.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.