Buyers have eyes on WA prize

Brad ThompsonThe West Australian
Buyers have eyes on WA prize
Camera IconBuyers have eyes on WA prize Credit: The West Australian

WA agribusinesses have a lot on their plate as they react to unprecedented interest from overseas investors.

Industry experts say in many cases the interest is unsolicited and encompasses everything from capital injections to joint ventures and outright purchases.

The approaches have local businesses unaccustomed to the attention scrambling to hire accounting firms and advisers to assess the merits of the offers and the people making them.

"Businesses are tooling up to assess whether people are serious because they are being approached by overseas com- panies and investors they have never heard of wanting to look at the books," one consultant said.

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"They are not used to the idea of data rooms and opening the books, so they're getting in professional help."

Most of the interest has come from Asia and centred on dairy and meat processors with export licences.

Harvey Fresh, Wellard, Craig Mostyn Group and Harvey Beef are some of the high-profile businesses known to have investors knocking, regardless of whether there is a "for sale" or "investors wanted" sign on the door.

Meat processors with export capacity, including Yeeda Pastoral Company, V&V Walsh, Western Meat Packers and Fletcher International Exports, are all considered tempting targets.

Azure Capital director Adrian Arundell said there was a disconnect between the scale of operations potential overseas investors were seeking and the opportunities available in WA.

"We are seeing increasing interest coming down from Asia, particularly with a focus on protein and people consistently looking at dairy," Mr Arundell said.

"But outside of those sectors and the key businesses it is harder to find agricultural assets of major significance.

"If you look down through the profile of businesses, the higher they are in terms of domestic consumption - or the smaller their export profile - the less interest there is for players out of Asia."

Mr Arundell said most of the interest was coming through investment banks and funds operating through Singapore and Hong Kong looking to supply consumers in China.

Melbourne-based consultant David Williams, who acted for Bega Cheese in the battle for Warrnambool Cheese and Butter, said dealing with Chinese investors was often a drawn-out process. Mr Williams said offshore investors were alerted to bigger, distressed assets on the market but unaware of the opportunities to invest in successful smaller-scale food producers.

Mr Williams noted that Japanese investors had returned to the agribusiness sector.

"The main interest in distressed food assets is coming out of China, but the Japanese are active again," he said. "We haven't seen much of them for the past 10 years but they are back with a force in food."

Mitsubishi grabbed a 25 per cent stake in Tasmanian Dairy Products in 2012. Hong Kong-based William Hui has bought United Dairy Power, which operates in South Australia and Victoria, for about $70 million.

Craig Mostyn Group chief executive David Lock said outside the dairy sector, there was a lot of "tyre-kicking".

"Certainty, there is an increasing appetite for export-oriented businesses," Mr Lock said.

"The interest in businesses producing pork and poultry for the domestic market is a lot less than in dairy."

There are about 1200 food manufacturing businesses in WA, ranging from small family operations to corporate entities.

The food manufacturing sector employs about 18,000 people.

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