Selling off the farm: Ridley could be next
Agribusiness stocks are in the spotlight after GrainCorp finally gave its backing to ADM's $2.8 billion offer. The move on GrainCorp follows foreign acquisitions of other agribusiness majors in recent years, including AWB and ABB Grain.
Ridley, which sold its Cheetham Salt business to Hong Kong's CK Life Sciences last year, was the next likely potential target, Commonwealth Bank analyst Jordan Rogers said. Bega Cheese had attractive assets for potential buyers, he said.
Ridley was once 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 like ADM because it had relationships with some of its end customers.
At the same time firms like Bega Cheese, which has assets in Victoria and southern NSW, were well-positioned to tap into the rising demand in Asia for dairy products, analysts said.
"What China is very low on consumption per capita is dairy, and [that's] growing rapidly. Australia and New Zealand are the two lowest-cost producers of dairy," one analyst said.
"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," the analyst said.
More generally, food production needs to increase by 70 per cent by 2050 to meet global demand, the United Nations' Food and Agriculture Organisation estimates.
"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.
Warrnambool Cheese and Butter - in which the Murray Goulburn Co-operative recently increased its stake, and of which Bega Cheese owns 17 per cent - is also regarded as a desirable asset.
BBY's Mr Hulme said he expected rising Asian demand to add about 0.5 per cent to 1 per cent to agribusinesses' profits. "It's going to be long-term. It's a positive industry dynamic, but I would expect it be at a modest increment to the growth you might otherwise see," he said.
On Friday, GrainCorp's board provided backing for ADM's sweetened takeover offer.
Under the US company's offer, GrainCorp shareholders will receive $12.20 per share, with a further $1 per share to be paid in dividends.
Frequently Asked Questions about this Article…
GrainCorp's board backed a sweetened takeover offer from US commodities company Archer Daniels Midland (ADM). Under the offer, GrainCorp shareholders will receive $12.20 per share, with a further $1 per share to be paid in dividends, as part of ADM's roughly $2.8 billion bid.
Analysts named Ridley — the Australian animal feed maker — as a top potential target after the GrainCorp-ADM deal. Commonwealth Bank analyst Jordan Rogers flagged Ridley, noting its profile after selling Cheetham Salt last year, and BBY analyst Dennis Hulme said Ridley is attractive to international grain traders because of its customer relationships.
Bega Cheese has assets in Victoria and southern NSW that position it to tap rising dairy demand in Asia. Analysts note Australia and New Zealand are low‑cost dairy producers, and while Bega is majority owned by dairy farmers (making a short‑term takeover less likely), its assets could be desirable to Asian food companies or international dairy firms over the longer term.
The article names Goodman Fielder as another potential takeover candidate and highlights Warrnambool Cheese and Butter as a desirable asset (noting Bega owns 17% and Murray Goulburn increased its stake). It also points to past foreign acquisitions of AWB and ABB Grain as part of a broader trend.
BBY analyst Dennis Hulme said rising Asian demand is expected to add roughly 0.5–1% to agribusiness profits over the long term. Analysts describe this as a positive but modest industry dynamic driven by growing consumption in Asia.
The takeover interest follows recent foreign acquisitions of major agribusinesses and concerns about food security as global demand grows. The UN Food and Agriculture Organization estimates food production needs to rise about 70% by 2050, and analysts say security of supply and rising Asian consumption are accelerating interest in Australian food assets.
Ridley sold its Cheetham Salt business last year to Hong Kong's CK Life Sciences, a move mentioned by analysts when discussing Ridley's attractiveness to potential buyers.
Based on the article, watch for signs like a company's strategic assets (dairy processing, regional footprint), recent asset sales or acquisitions, ownership structure (for example farmer ownership), board responses to offers, and direct exposure to rising Asian demand. These factors are repeatedly cited by analysts as reasons a company may attract takeover interest.
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