Livestock Improvement Corp takes majority stake in Brazilian JV partner

Livestock Improvement Corp [NZX: LIC], which provides testing and artificial breeding services to the dairy industry, has purchased a majority interest in its Brazilian genetics distributor, NZ Brasil Genetics Producao Animal for an undisclosed sum.

The joint venture, LIC NZBrasil, includes the exclusive supply of the farmer-owned cooperative's dairy genetics for a 10-year period, and supports LIC's goal to generate $1 billion in revenue by 2025, the Hamilton-based company said in a statement. The company is hoping to capture a growing demand for artificial insemination in Brazil's expanding dairy sector, with annual production to surpass 38 billion litres by 2020.

"Brazil is the fifth largest dairy industry in the world, with more than 23 million dairy cows," said LIC chief executive Wayne McNee. "Huge growth is expected over the next 10 years and this presents a significant opportunity for LIC, and our shareholders. Our objective with the joint venture is to support the growth of Brazilian dairy industry, providing high quality genetics solutions to build a sustainable business that will generate a better return for LIC in New Zealand."

In July, LIC reported full-year profit dropped about 24 percent to $18 million, reflecting spending on technology and infrastructure and a drop in the value of its biological elite bull team.

Shares of LIC trade on the NZX in a market restricted to members of the cooperative. They were last quoted at $6.10, giving the company a market value of $180 million.