Harvey Beef suitor on sale sidelines

The battle to secure Harvey Beef appears far from over amid speculation a Japanese company's failure to strike a deal after weeks of crunching the numbers has sparked renewed interest from WA-based Craig Mostyn Group.

Marubeni-backed S Foods was in the box seat to buy WA's biggest beef producer and exporter last month but Harvey Beef remains on the market with an asking price of about $40 million.

Asian private equity fund Pacific Alliance Group is understood to be keener than ever to sell Harvey Beef after offloading Queensland's Kilcoy Pastoral Co to China's New Hope Investment Fund earlier this week.

Industry sources said it did not make sense for PAG to hang on to Harvey Beef, a smaller and less profitable business, for any longer than it had to in the wake of the Kilcoy sale.

CMG has been on the hunt for a major acquisition in meat protein for some time and told _WestBusiness _in May that it had a $100 million war chest.

Chief executive David Lock previously nominated Harvey Beef as a possible target but refused to comment yesterday.

South American beef processing giant JBS has also shown interest in Harvey Beef without making a formal offer.

Harvey Beef and Kilcoy chairman John Nicholls said yesterday the Kilcoy deal was unrelated to the WA business.

Mr Nicholls refused to comment on Harvey Beef and any possible sale but said overseas interest in Australian agricultural assets was increasing.

"There is significant interest worldwide in Australian agricultural assets and that has been the case for a few years," he said.

"The interest is accelerating because food demand is growing rapidly and supply is remaining relatively constant."

Mr Nicholls said while Australia's costs of production were higher than competitors, its capacity to produce secure, safe and high qualify food was prized by investors.

Kilcoy has a processing capacity of 285,000 cattle a year and employs 750 staff while Harvey Beef employees about 300 staff and processes about 145,000 grass and grain-fed cattle each year.

Mr Nicholls said he would remain a director of Kilcoy with the New Hope Investment Fund not expected to make major changes at management level.

NHIF has links to one of China's biggest feedlot operators. It was also one of the parties global equity firm TPG outbid for Australia's biggest poultry producer, Ingham, earlier this year in a $880 million deal.

The Kilcoy deal completes another asset sell-off for 20 per cent stakeholder Elders.