Elders to sell Indonesian assets
Agribusiness Elders has decided to sell its underperforming feedlot and processing assets in Indonesia, and will extend its agricultural chemicals business and livestock agency operations in Australia.
Elders Indonesia operates a feedlot with a capacity of about 8,200 head, as well as an abattoir.
Elders has decided to sell the assets, following a performance review which showed that they were performing below the required return on capital.
"High cattle costs and changing Indonesian governmental policies have adversely affected the performance of our Indonesian business, making it appropriate to divest these assets" Elders chief executive Mark Allison said on Monday.
Mr Allison said Elders will still have a presence in Indonesia - along with China and Vietnam - through its retail meat distribution businesses in those countries.
Mr Allison said exiting the Indonesia feedlot and processing facilities will allow Elders to redirect capital to the retail meat distribution business in Indonesia, and initiatives more aligned with Elders' acquisition strategy.
Elders hopes to complete the sale of the Indonesian assets to PT Pramana Austindo Mahardika by June 30, 2018.
Elders also said on Monday that it has agreed to acquire Titan Ag, an Australian-based producer and supplier of crop protection and animal health chemicals and fertiliser, which has been selling its products in Australia through Elders.
Elders is also set to buy Kerr & Co Livestock, the largest privately owned independent livestock business in south-west Victoria, which handled about 416,000 sheep and 16,000 cattle last financial year.
Mr Allison said Titan represents an attractive opportunity to extend Elders' supply chain for agricultural chemicals.
"Titan is a quality brand that has the potential to significantly grow sales of its product range," he said.
Titan is expected to generate earnings of $6.5 million to $7.5 million in its first full year under Elders' ownership.
Mr Allison said the acquisition of Kerr & Co Livestock will enable Elders to increase its agency business in a highly valuable livestock region of Australia.
Shares in Elders were two cents, or 0.26 per cent, lower at $7.73 at 1133 AEST.
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