Terra Firma eyes S. Kidman & Co

09 May, 2014 05:35 AM
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Adelaide-based S. Kidman & Co is the nation's third-largest in terms of cattle numbers

ONE of Australia's largest landholders, S. Kidman & Co, is testing appetite for a partial sale of its business, which includes cattle properties and leases in three states and the Northern Territory.

London-based private equity company Terra Firma – the owner of a majority stake in cattle producer and former Packer properties Consolidated Pastoral – has held discussions with S. Kidman & Co in recent weeks about a potential investment.

Adelaide-based S. Kidman & Co, which was founded in 1899, is the nation's third-largest in terms of cattle numbers and the company produces grass-fed beef for export to Japan, the United States and south-east Asia.

A portion of S. Kidman & Co – sources suggested a stake of more than 50 per cent – is believed to be on the block, with an information memorandum doing the rounds.

Certainly, the industry is moving through a phase of consolidation, with the North Australian Pastoral Company (NAPCO) put up for sale last year.

Terra Firma acquired Consolidated Pastoral, Australia's largest live cattle business and one of the country's biggest station owners, from the Packer family in 2009.

While Consolidated Pastoral already has about 360,000 head of cattle across 5.6 million hectares of land, chief executive Keith Warren is not afraid to scale up.

Warren told The Australian Financial Review last year that difficult market conditions had created "a very good opportunity for us to expand".

Terra Firma was known to have run the ruler over NAPCO last year but price expectations did not match.

S. Kidman & Co reported an after-tax loss of $3.3 million for fiscal 2013.

This reversed a $9 million profit in the last financial year and was principally caused by the market value of its cattle herd decreasing by $20.7 million.

It is said to be worth between $250 million and $300 million.

AFR
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READER COMMENTS

Bushfire Blonde
9/05/2014 7:10:55 AM

Oh no, no, no - don't let the moneyed men get hold of one of our few Little Aussie Battlers!
Top Ender
9/05/2014 7:51:06 AM

Given the number of Kidman decendents who make up the ownership of S Kidman & Co today, this may well be the only way to return capital to them. The fact that Terra Firma is looking is to be expected as both are in the same business and same geographic areas, so would cause no increase in costs. It seems only those from afar are able to see Australian Agriculture's potential as an investment opportunity. The good thing is that the English, have proven long term investment expectations. Lets face it Kidman's would not exist if not for original English investment.
Honest John
9/05/2014 5:17:37 PM

Please give us all a break Top Ender ! Get your facts straight, because there was no original English investment.
YouSureMate
9/05/2014 10:28:38 PM

Really ? No original English Investment ? Those blighters got some foreign chappy to pay for their penal colonies too ? Yep, you must be right. Never spent a penny on the Empire and left no legacy to speak of, did they, the shifty lot. If they had, perhaps we wouldn't be having this exchange in French, eh ?
Greg Campbell
10/05/2014 4:46:45 PM

The story is incorrect. There is no controlling interest for sale in Kidman. From time to time smaller parcels of shares change hands, mostly between family members. Sometimes family members seek external advice as to the value of their interest and it seems this could be the origin of this story. Over the years approaches have been made to shareholders regarding larger parcels but to date these have always been rejected.
Banga
10/05/2014 6:03:31 PM

So they, Terra Firma, have an appetite for greater losses. The poor investors in their fund are being asked to double the bet while they take large management fees!!!
Discusted
11/05/2014 5:37:34 PM

Unless Australian Agriculture can vertically integrate the future is bleak. Blood sucking parasites like Coles and Woolworths and a noncompetitive meat processing sector that is making record profits at out expense will eventually send us all to the wall. We need a new paradigm in Ag and we need to get the banks out of our lives and develop alternative funding models and financial products that are more suited to Ag than what we currently have.
pepper
11/05/2014 8:15:08 PM

Discusted, we do not need vertical integration... if we had an independent transparent market at the primary production interface, those blood sucking parasites you refer to would have to buy at the selling offer price and not dictate a contracted price to a few clowns who have painted themselves into a corner financially and flood the supply lines to allow the big boys to dictate price.( i.e. be price makers ). Processing and retailing should also be separate markets. Export quotas should be included within the market demand which is balanced off the available primary supply in setting price
Archibald
12/05/2014 7:46:37 AM

Discusted, it is the power given to the "industry" (processors and retailers), by government in the AMLI Act 1997 whose marketing is funded by the grass fed producer for no return that is one problem. All of the schemes NLIS, LPA, GSRB are driven by the top end to the cost of the grass fed producer whom gets no benefit, until the grass producer segment is in deep trouble.
Outback
5/09/2015 10:09:18 AM

Disgusted is exactly right, on all his points. We need proper government intervention into monopolies again our farmers. To date the state and federal governments inaction has been criminally negligent

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