News 2065 views last update:6 Aug 2012

Ingham Enterprises for sale, but who's to buy?

Inghams Enterprises, Australia's No 1 chicken & turkey meat processor (33.3%) until Baiada took over Bartter/Steggles( 45%) a few years ago has been put up for sale by the surviving partner Bob Ingham (81).

Asking price was variously reported as being $1.5, $1.6, $1.8 and $2.00 billion Australian dollars.

Charoen Pokphand Foods (CPF) is reported as being the hot favourite, market experts can't see the sense in that unless they wanted to acquire a safe source of broiler meat from a relatively disease free source.

CPF and other Thai integrators lost a lot of export market in Japan, Korea and the EU during various AI outbreaks.

''We're very interested in Australian industry,'' the head of CP's Australian office, Richard Lovell, told BusinessDay. ''On the poultry side it will be up to my superiors in Thailand. So I don't know whether or not we'd be interested in Inghams.''

Other possible buyers include Brazilian beef producer JBS or a consortium from China.

Chinese interest in the Australian food industry is also strong, with state-owned enterprise Cofco still on the acquisition trail after snapping up Tully Sugar last year.

It is believed US agribusiness Cargill has already examined Inghams and decided not to bid.

Competition authority
The problem for Inghams will be the Australian government competition regulator ACCC who won't let them sell to Baiada, even if they wanted it, because a combined Inghams/Baiada would hold over 75% of the 834,000 tonne poultry market.

Inghams said it sold about A$2 billion worth of chicken in the year to the end of June, but there is little other financial data available about either of the two family-owned companies.

This is because an existing exemption from filing annual accounts was preserved when corporate reporting rules were changed in 1995.

Retail market dominance
In combination with Australia’s two leading supermarkets, Coles and Woolworth, who are Inghams and Baiada biggest customers, these would control 80% of the Australia retail spend.

Then if it’s a foreign buyer any sale would have to go before the Foreign Investment Review Board

When Kevin McBain, the CEO of Inghams talked to the media in April, he proclaimed never in his experience had he seen market conditions - (caused by Coles and Woolies rivalry for market share) being so tough.

He virtually admitted that they weren't making any money and certainly the smaller integrators were losing money in the current market – not a great time to sell a big poultry processing company then.

There have been various reports in the financial press but an article from the Brisbane Times is the only one making the CPF claim.

Inghams biggest processing plant is based in Brisbane but the head office is in Sydney.

Whatever happens, it will be a destabilising factor for the Australian broiler market overall and banks certainly prefer to lend to growers with an Inghams contract rather than any of the other integrators.


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