QAF Limited, the multi-industry food company, has entered into a sale and purchase agreement (SPA) on June 8 to dispose of its primary production business in Australia, following a “competitive sale process”.
The group’s wholly-owned subsidiaries, Hamsdale International and Oxdale Investments have agreed to sell the entire issued share capital of Rivalea Holdings and Oxdale Dairy Enterprise to Industry Park.
Rivalea Holdings owns two Australian-incorporated subsidiaries and Diamond Valley Pork.
The indicative total purchase price for the sale shares will be paid entirely in cash, which is estimated to be around A$107.9 million ($110.3 million).
Shareholder loans extended by the QAF Group to the primary production business amounting to A$40 million will be fully repaid upon completion of the sale.
Together with the indicative purchase price, QAF will receive some A$148.1 million.
Industry Park is an Australian-incorporated company. It is part of JBS S.A., a Brazilian company listed on B3 – Brazil Stock Exchange with a market capitalisation of US$15 billion ($19.85 billion).
JBS is the largest animal protein business and second largest food company in the world.
Rivalea Holdings and Oxdale is a leading integrated pork producer in Australia with feedmills, pig genetics, pig breeding and grower farms, as well as pork processing plants.
Based on its financial information for the FY2020 ended Dec 31, 2020, Rivalea Holdings and Oxdale recorded net profit before and after tax of $19.8 million and $15 million respectively.
The purchase price for the sale shares will be determined based on the agreed enterprise value of Rivalea Holdings and Oxdale of A$175 million.
The final purchase price will be determined based on the financial condition of both Rivalea Holdings and Oxdale as at the completion date, taking into account its total enterprise value, total actual net external debt, actual related party amounts owed by Hamsdale International and Oxdale Investments, as well as total actual net working capital, measured against the pre-agreed net working capital amount.
Upon the execution of the SPA, Industry Park will pay a deposit of A$8.75 million, which is 5% of the total enterprise value.
On completion, Industry Park will pay Hamsdale International and Oxdale Investments the estimated purchase price determined in the SPA.
On the disposal, the group had previously announced its intention to focus on its bakery and distribution and warehousing segments in the core markets of Singapore, Malaysia and the Philippines, catering to a growing 650 million population of Asean countries.
The sale of the primary production business, which is in the animal protein segment, is deemed as being “very different” from the other businesses and operates in a different geographical region.
QAF is in the process of adding a new line at the Gardenia Malaysia plant in Bukit Kemuning that will cost an approximate $26 million.
It also plans to expand production facilities at North Luzon in the Philippines with an estimated cost of $40 million.
The group intends to add an additional bread line at the Johor plant to supply both Singapore and Malaysia, and upgrade the bread production lines in Singapore.
The total expected capital expenditure for its plans add up to around $116 million. This is in addition to the investments into the bakery business in the Philippines and Malaysia made in recent years.
Following the disposal, QAF intends to pay a special dividend of 2 cents per share, amounting to some $11.5 million in total.
Shares in QAF closed flat at 95.5 cents on June 8.
