August 31, 2011 / 11:11 AM / in 6 years

Affinity in talks to buy Aussie meats firm: source

HONG KONG (Reuters) - Private equity firm Affinity Equity Partners is in exclusive talks to buy a majority stake in Australian meat products firm Primo Smallgoods, a deal that could value the company as high as $1 billion, a source with direct knowledge of the matter told Reuters on Wednesday.

Affinity wants to keep the Lederer family who founded and currently control the firm in the business, the source added.

Primo is planning to build a manufacturing plant at an estimated cost of A$130 million ($138 million), Australian media reported on Wednesday.

Pan-Asia buyout shop Affinity submitted a final bid for the firm in July, backed by financing of about A$580 million from 11 banks. Blackstone Group (BX.N) had previously expressed interest in a stake but did not enter a final bid, sources previously told Reuters.

Primo had earnings before interest, tax, depreciation and amortization of A$104 million.

Family owned Primo Smallgoods, which has contracts with Coles and Woolworths (WOW.AX), has hired Macquarie Bank (MQG.AX) to run a dual-track sale and IPO process.

Affinity declined to comment. Macquarie and Primo could not be reached for immediate comment. The source declined to be named because the discussions were not public.

($1 = 0.937 Australian Dollars)

Editing by Denny Thomas and Erica Billingham

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