WCB milks shareholders for more cheese

Just weeks after announcing an 87.8% slump in its profit for the year ended 31 March 2016, Warrnambool Cheese and Butter (WCB) launched a $142 million capital raising.

The capital raising is a 3 for 8 pro-rata renounceable entitlement offer of new shares at an offer price of $6.75 per new share, an 18.2% discount to the closing price of WCB shares on the day before the capital raising was announced.

The funds raised through the capital raising will be used to pay off WCB’s existing debt, providing it with greater financial flexibility to invest in strategic capital investment initiatives, including projects to expand its cheese manufacturing capacity and develop a new enterprise resource planning system.

Foreign investors do deal for Australian seed producer

NYSE listed E I Du Pont De Nemours And Co (Du Pont) has sold its Australian agribusiness, Pioneer Australia Seeds (Pioneer), to New Zealand’s Philip Yates Family Holdings.

Pioneer, which will be renamed GenTech Seeds, has a variety of Australian operations, including production, sales, marketing and distribution of corn, sorghum and canola seeds.

DuPont Pioneer, a subsidiary of Du Pont and one of the world’s largest producers of plant genetics, will retain ownership of assets in Toowoomba and Wagga Wagga after completion of the deal.

New joint bidders enter fray for S. Kidman & Co

In late May 2016, the sale process for S. Kidman & Co (Kidman) was re-opened, leading to a $370 million joint offer by crowd-funder DomaCom and Lloyds Business Brokers (Lloyds).

The offer by DomaCom and Lloyds matches the offer previously made by a consortium consisting of China’s Dakang Australia Holdings and its ASX-listed partner, Australian Rural Capital, which was rejected by Federal Treasurer Scott Morrison in April. If successful, DomaCom and Lloyds plan to divide the assets, with DomaCom taking Kidman’s land and Lloyds taking its operating business.

DomaCom and Lloyds are not the only suitors for Kidman. Ernst & Young are working on a new shortlist of bidders, the majority of whom are adopting the same approach as DomaCom and Lloyds, with a pairing of foreign and domestic interests.

Paraway Pastoral Company buys two Western Grazing stations and Queensland Investment Corporation obtains interest in North Australian Pastoral Company

Over the past year, the total value of sales of Australian cattle station land has reached almost $1 billion, with the bulk of investment coming from foreign investors and superannuation funds.

Two deals in May 2016 contributed almost half of that figure, with Macquarie Group's Paraway Pastoral Company buying two Western Grazing owned stations for $148 million, and Queensland Investment Corporation (QIC) purchasing an 80% interest in the North Australian Pastoral Company for more than $300 million.

Both of those deals included investments by foreign buyers or superannuation funds, with Paraway Pastoral Company backed by the Dutch pension fund Stichting Pensioenfonds ABP and QIC backed by the British-based Pension Protection Fund and the Queensland government's Long Term Asset Advisory Board.

New investment in Nufarm and global activity in chemicals sector

ASX-listed agri-chemicals company, Nufarm, attracted a new investment by a Chinese investor in March. The Chinese investor acquired a shareholding in excess of 5% of Nufarm. Media reports in the Australian Financial Review and the Sydney Morning Herald speculated that Nufarm may attract interest from other investors. There have been several key deals announced in the sector recently including China National Chemical’s bid for Syngenta, Dow Chemical and DuPont’s merger, and Bayer’s bid for Monsanto.

Investments by Murray Goulburn

In addition to other developments described in “What’s in the News”, Murray Goulburn announced in March 2016 its intention to develop a new $300 million nutritional powders facility at its Koroit site. The planned new facility will manufacture infant nutritional products for supply into Asian markets including China and Indonesia. Establishment of this facility is ongoing.