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Historic South Australia Cattle and Sheep Station Sells for $50M

December 5, 2017

The historic 2,870-hectare South Australian cattle and sheep station, Mount Schanck, has been sold by the Evans family to Thomas Foods International for more than $50 million cash.

Established in 1988, Thomas Foods has grown to become the largest family-owned meat processor in Australia, and the third largest overall meat processor in the country behind JBS and Teys Australia, with annual revenue in excess of $1 billion.

Listed in October for the first time in 200 years, Mt. Schanck was offered on a walk-in, walk-out basis and included an 1860’s four-bedroom home, 5,000 megaliters of groundwater entitlements, 700 acres of lucerne-based pasture under center pivot irrigation, sheep and cattle yards, a six-stand shearing shed, staff and shearer’s residences, more than 2,000 Rennylea, Te Mania and Landfall Angus cows with calves and heifers, 2,500 ewes with lambs, a range of equipment, plant, and the capacity for dedicated fodder and hay production as well as third-party production of potatoes and other cash crops.

“Marking SA’s largest agribusiness transaction in several years, Mt Schanck represented an outstanding opportunity to acquire an investment scale asset that has played an important part in the history of Australian agriculture,” Thomas told Stock Journal.

The sale was finalized one week before the close of the period of expression of interest – reflecting strong buyer interest from high net worth individuals, institutional investors, and family offices, as well as the strong seller’s market.

This uptick for the Australian cattle sector has been recently demonstrated when the Canadian pension fund the Public Sector Pension Investment Board (PSP Investments) acquired a 15 percent stake in Arcadian Organic Natural Meat Co. – one of the largest organic meat companies in the country – along with two cattle stations: the 28,340-hectare Oakwood Station in western Queensland, and the 1,740-hectare Warilba Station in western New South Wales.

The Canadian fund cut its first Australian farmland deal in 2015 when it acquired Sir Graham McCampley’s 13,650-hectare Oakleigh and Stoodleigh stations for approximately $13 million in 2015. Today, the Oakwood and Warilba Stations, along with the stake in Arcadian Organic Natural Meat, will join a growing portfolio that includes the Ambalindum and Numery stations that HCA acquired earlier this year in April for A$50 million (US$33 million).

Three years of acquisitions and portfolio building has brought HCA to now manage 85,000 head of cattle across 600,000 hectares, making it a rival of standing among a flurry of large scale deals that brought the likes of Gina Rinehart, who together with China’s Shanghai CRED, acquired the S. Kidman cattle empire for A$386.5 million in 2016, and Andrew Forrest, who’s Minderoo Group expanded its cattle holdings to more than 1 million hectares.

Furthermore, only weeks ago, another $45 million deal was announced, when TRT Pastoral Co., headed by Victorian businessman Tim Roberts-Thompson, agreed to acquire the King Island Aggregation from the Sustainable Agriculture Fund (SAF).

In September, TIAA Global Agriculture Properties acquired 10 of the 17 properties making up the SAF portfolio, totaling 16,000 hectares across New South Wales, and Victoria.

The $45 million unconditional cash bid from TRT beat out rival bids from a group of King Island cattlemen who were looking to split the property between them, and two additional bids from overseas parties. In the end TRT beat the field to acquire the aggregation that includes all cattle and plant, and which has proven to be a high-earner for SAF over the course of its ownership, returning 12 percent per year for seven years, with half of those returns allocated to income.

The sale of Mt. Schnack was managed by CBRE Agribusiness’ Danny Thomas and Phil Schell who noted the factors about Mt. Schnack that drew such immediate attention.

“The iconic nature of the property, its reputation and its presentation by the Evan’s family were key factors in drawing the attention of a strong field of buyers,” Thomas told AFR. “These factors combined to elicit a very strong offer prior to the close of the EOI, which the vendors chose to accept given it was on cash terms with little conditionality, and included the retention of their loyal staff.”

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.

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