Scales Corp will sell its cold storage businesses to newly-incorporated US cold chain company Emergent Cold for $151.4 million as it shifts to a greater focus on pure agribusiness.
"We have identified our strengths as (1) operating fully-vertically integrated agriculture businesses, (2) participating in businesses with an export focus, and (3) adding value through connections to the China market," said Chairman Tim Goodacre in a statement to the NZX.
"In addition to being less aligned with our core strengths, the returns (measured as return on capital employed) from our storage activities are also lower relative to our other business divisions and broader opportunities available to the group," he said.
Scales currently comprises three operating divisions: horticulture, storage & logistics and food ingredients.
The deal is subject to approval by the Overseas Investment Office. Goodacre said there are no plans to return to capital to shareholders but "the proceeds are intended to be used to pursue other attractive opportunities in New Zealand agribusiness, both currently and in the future."
In April, chief executive Andy Borland told BusinessDesk that Scales is eyeing potential agribusiness acquisitions that would be complementary to its apple business.
Scales is New Zealand's second-biggest apple exporter after T&G Global and has invested in apple crops that are sought after by customers in Asia, where the sweeter, redder varieties fetch a premium price over more traditional varieties.
The cold storage businesses include Polarcold Stores Ltd and Whakatu Coldstores Ltd, which were merged on January 1 under the Polarcold brand.
"We look forward to supporting the continued growth and expansion of the business, and its customers, throughout New Zealand and Asia Pacific with Emergent Cold," said Neal Rider, chief executive of Emergent Cold, which has operations in Australia and Vietnam.
The statement was made after trading closed. Scales shares gained 0.2 per cent to $4.76 today.