GrainCorp deal stirs agri-interest
Australian agribusiness stocks are in focus after GrainCorp finally backed ADM's $2.8 billion takeover offer. The move on GrainCorp followed foreign acquisitions of other agribusiness majors in recent years including AWB and ABB Grain.
Ridley, which sold its Cheetham Salt business last year to Hong Kong-based CK Life Sciences, was the next potential target, Commonwealth Bank analyst Jordan Rogers said. He also nominated Bega Cheese as having attractive assets.
Ridley has been a takeover target of GrainCorp. The stockfeed maker rejected GrainCorp's $415 million offer in 2008.
BBY analyst Dennis Hulme said Ridley would be attractive to international grain traders such as ADM as it had relationships with some of its final customers.
At the same time, companies such as Bega, which has assets in Victoria and southern New South Wales, were well positioned to tap into the growth in the demand for dairy in Asia, analysts said.
"What China is very low on in consumption per capita is dairy," one analyst said.
"And it's growing rapidly, and Australia and New Zealand are the two lowest-cost producers of dairy products.
"Bega Cheese is majority owned by dairy farmers so we don't think they are a takeover target in the short term ... but in the longer term, there are assets that would be desirable for an Asian food company or an international dairy company."
More generally, food production needs to increase by 70 per cent by 2050 to meet global demand, the UN's Food and Agriculture Organisation estimated in a report.
"The security of supply is a big issue. This is not a new theme, but it's accelerating as populations are growing faster and resources are fixed," another analyst said, adding that breads and spreads supplier Goodman Fielder was another possible takeover candidate.
Dairy producer Warrnambool Cheese and Butter— was also seen as desirable.
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GrainCorp backed US commodities company Archer Daniels Midland's (ADM) $2.8 billion takeover offer, a move that sparked renewed investor attention on Australian agribusiness takeover activity.
Analysts named Ridley Corporation as the frontrunner, with Bega Cheese also highlighted for its attractive assets; Goodman Fielder and Warrnambool Cheese and Butter were mentioned as other possible candidates.
Ridley, a stockfeed and animal feed provider, has customer relationships that appeal to international grain traders, and it has a history of takeover interest—GrainCorp's $415 million offer was rejected by Ridley in 2008.
Bega Cheese was cited for owning assets in Victoria and southern New South Wales that could tap rising dairy demand in Asia; however, analysts noted it is majority owned by dairy farmers and therefore unlikely to be a short‑term takeover target, though its assets could attract long‑term interest.
The article notes Ridley sold its Cheetham Salt business last year to Hong Kong‑based CK Life Sciences, and it referenced earlier foreign takeovers in the sector such as AWB and ABB Grain as context for current interest.
Analysts say rising dairy consumption in Asia—China in particular has low per‑capita dairy consumption that is growing—makes Australian and New Zealand dairy assets attractive because they are among the lowest‑cost producers of dairy products.
Security of supply and rising global food demand are central themes: the UN Food and Agriculture Organization estimates food production needs to increase by about 70% by 2050, which heightens interest in food and agricultural assets.
Keep an eye on takeover bids and company responses (like GrainCorp backing ADM), analyst commentary identifying attractive targets (Ridley, Bega, Goodman Fielder, Warrnambool), asset sales or disposals that reshape portfolios, and sector themes such as export exposure and relationships with final customers that make companies takeover candidates.
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