Deals - Asia

Terra Firma founder in management buyout deal for Australian farm CPC

SYDNEY (Reuters) - Terra Firma founder and chairman Guy Hands is leading a consortium to buy the firm’s Australian cattle company, Consolidated Pastoral Co (CPC), off its funds in a management buyout, CPC’s chief executive Troy Setter said on Wednesday.

After having spent more than 18 months trying to sell cattle land across northern Australia the size of a small country for over A$1 billion ($673.70 million), the British private equity firm, which bought CPC in 2009, had raised about A$310 million for a 40% stake, a source close to the company said.

Terra Firma will now sell the rest to a group led by Hands that also includes management for an undisclosed amount, CPC said in a separate statement.

“The Hands family will provide a cornerstone commitment and invest alongside CPC management,” the statement said. “Other investors will be invited to participate in the buyout.”

Terra Firma had been keen to offload the whole chunk in one piece for more than A$1 billion, even as the country experiences its worst drought on record, Reuters reported. []

Soon after the firm put the station on the market, Reuters reported the anticipated premium for CPC would make a local sale to all but the wealthiest cattle-focused parties difficult given the need for major capital works.

Indeed, Terra Firma has sold eight out of the 16 properties on sale - just over 40% of the 5.5 million hectares (55,000 square kilometers) on sale - to third parties for about A$310 million, according to the source, who declined to be identified because the information is private.

CPC, however, is still the largest private cattle company in Australia, with 3.2 million hectares (7.91 million acres) of land, a carrying capacity of close to 300,000 head of cattle and two feedlots in Indonesia.

“I am personally very excited about the future of CPC and delighted to be partnering with the management team of CPC,” Hands said.

“CPC is a high quality, well run business with a strong position in a large and growing industry. Its operations are close to major beef-consuming markets.”

On Tuesday, The Australian newspaper reported the consortium expected to pay between A$600 million to A$700 million for the assets. CPC declined to confirm the value of the deal.

“It is great to have the chance to offer our management teams (across the stations) the opportunity to co-invest in this opportunity,” Setter told Reuters on Wednesday. “We’ve already had fantastic feedback from our team and people across the agricultural sector.”

Editing by Jacqueline Wong