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Summary
- SunRice's CopRice business is ready to expand into the NZ dairy market.
- The deal to acquire the dairy nutrition business of Ingham’s is expected to conclude by Q1 2021.
- The takeover is expected to build on CopRice's already established export business in NZ.
The CopRice business of Ricegrowers Limited (trading as SunRice Group on the ASX, ASX:SGLLV) is all set to cater to Kiwis. The Company has signed a deal to take over the NZ dairy nutrition business of Inghams Group Limited.
The deal includes the acquisition of the NZ company's direct-to-farm and packaged dairy business in NZ with the brand names' Top Cow' and 'Top Calf'. It also includes the feed mill at Hamilton.
Inghams’ operations are mainly based in the key Waikato dairy region of the North Island. It produces and sells dairy and calf feed items.
Image source: ASX announcement dated 18 December 2020
All the investments highlighted by the Chairman are expected to deliver benefits from financial year 2022. In line with its 2022 Growth Strategy, the company is also exploring other strategic and organic growth opportunities.
Transaction Details
CopRice is a leading stockfeed and companion animal products supplier in eastern Australia. This is the first time when CopRice is expanding its operational footprint to New Zealand through this strategic acquisition. The deal will build on its already established export business into the NZ market.
The deal follows the significant acquisition of the dairy and beef business of Riverbank Stockfeeds in August 2020. That acquisition had boosted CopRice's position in the Victorian beef and dairy market.
©Kalkine Group 2020
CopRice General Manager Peter McKinney has highlighted that the transaction will take CopRice's 40-plus years of dairy nutrition expertise to the NZ market. It will add to the success of its already established market leadership through packaged dog and horse range marketed into the agricultural retail sector.
The deal will improve the present relations with strategic agricultural retail clients with increased variety of packaged products to new species, particularly in the critical packaged calf market, he added.
The deal expected to complete by 31 March 2021 is valued at NZD 11.5 million. The acquisition will be supported by available debt facilities and existing cash reserves. The deal needs to fulfil many precedent standard conditions. The business being acquired registered unaudited revenue of NZD 25 million in the full year ended 27 June 2020.
Must read: Ricegrowers Limited (ASX:SGLLV) pulls off decent results despite challenges
On 18 December 2020, the stock of SunRice traded at AUD 6.180, down by 0.564% from its previous close.
