Aussie private equity firms line up to bid for Mainland Poultry, AFR says
Australian private equity firms are lining up to bid for Mainland Poultry, whose businesses include New Zealand's biggest egg producer, with the business said to be worth as much as $225 million, The Australian Financial Review's Street Talk column reports.
The Dunedin-based company is controlled by Michael Guthrie, with about 76.6 percent of the shares, while Dunedin businessman Murray Valentine holds about 18 percent, and Jeff Winmill's family owns 5.3 percent. The shareholders have been considering their options for the investment needed to replace equipment to meet the requirements of the Animal Welfare (Layer Hens) Code of Welfare 2012, which calls for the staged phasing out of battery cages in favour of larger colony cage systems or free-range.
In February, Guthrie confirmed that Mainland had retained ANZ Bank to advise on options for the business, given its capital expenditure requirements. At the time, managing director and a founding partner Guthrie said the shareholders had in mind that they weren't getting any younger and "may want to have a pathway to liquidity".
The AFR said the required capex may be about $60 million. Among those to have reached the second stage of due diligence were Pacific Equity Partners, Navis Capital, Adamantem Capital, Crescent Capital and CHAMP Private Equity, although some may drop out, it said.
Mainland Poultry produces one-third of New Zealand's eggs, through its Zeagold Foods unit, which has the Woodland and Farmer Brown caged and free-range egg brands, processes eggs products for the food industry, and produces a range of animal feeds through MainFeeds. It operates as a vertically integrated business and the feed unit had been set up as part of that but now sold to other customers and exported.
Under the Animal Welfare (Layer Hens) Code of Welfare 2012, farmers weren't permitted to install new battery cages and existing ones must be phased out by 2022. Under the timetable, about 45 percent of battery cages are to be gone by 2018. At that date, any equipment installed prior to 2000 had to be replaced - long before farmers would have expected to replace ageing assets.