Bloomberg News

TPG Said to Pay About $900 Million for Poultry Producer Inghams

March 10, 2013

Ninety-four years after Walter Ingham started out with a rooster and six hens, his grandson agreed to sell Australia’s biggest poultry producer to TPG Capital for about A$880 million ($901 million), according to two people familiar with the transaction.

Deals in the global food sector this quarter have already hit their highest level since the first three months of 2007, fueled by the pending $27.4 billion purchase of HJ Heinz Co. by a consortium of 3G Capital Inc. and Berkshire Hathaway Inc., according to data compiled by Bloomberg. An index of Australian poultry prices hit a record high in the December quarter after broiler meat exports doubled over the past five years.

Bob Ingham, grandson of the founder, is the sole shareholder of Inghams Enterprises Pty Ltd., which the U.S. private equity firm will buy for an undisclosed amount, the Sydney-based company said in a statement March 9. The poultry business was valued at about A$900 million during the sale, according to the people who declined to be identified because the matter was private.

“It is exciting to see the business embarking on its next stage of growth,” Ingham said in an e-mailed statement. “I am extremely proud of the business and its achievements to date.”

Loan Commitments

The Ingham family will keep control of its property portfolio and racing business “which is surplus to the operations of Inghams Enterprises,” the company said in the statement closing its eight-month sale process. Cheryl Pettinau, an external spokeswoman for Inghams at Quay Communications in Sydney, declined to comment on the valuations of the businesses or the sale price.

TPG has lined up loan commitments for A$775 million from at least seven banks to finance the acquisition, according to five people familiar with the negotiations.

The financing banks are in two separate groups, according to the people familiar. One includes Westpac Banking Corp. Macquarie Group Ltd., and Nomura Holdings Inc, the people said. The second includes Bank of America Merrill Lynch, Australia & New Zealand Banking Group, National Australia Bank Ltd., and HSBC Holdings Plc., they said. A deal meeting was held in Melbourne yesterday to combine the banking groups and agree on a final set of terms for the financing package, according to the people.

Group Assets

Started in 1918 when Walter Ingham bought a piece of bushland in south-western Sydney and a brood of chickens, Inghams Enterprises had revenue of A$2.2 billion in 2012, according to the company website. The company employs 8,000 people and has 10 poultry plants, nine processing plants, 11 mills for feed and a pig farm, it says. Group assets are worth more than A$2 billion, according to a slide on the website.

Global poultry demand stood at 285 million metric tons in 2011 and will rise 60 percent by 2030, according to Rabobank International data quoted by the Australian Chicken Meat Federation, an industry body. A United Nations index of world food prices stood at 210 points in January, up 44 percent in the last four years and more than double its level a decade ago.

The deal is the largest acquisition of an Australian food company since July 2010, when Wilmar International Ltd bought CSR Ltd.’s Sucrogen business for $1.54 billion, according to data compiled by Bloomberg.

Inghams hired Investec Plc (INVP) in July to find a buyer after Ingham decided to sell the business. Last month it asked banks to submit proposals for a share sale as a possible alternative to a sale, people familiar with the matter said Feb. 14.

TPG, based in Fort Worth, Texas, sold its stake in Australian retailer Myer Holdings Ltd. (MYR) in a 2009 initial public offering that raised A$2.1 billion, Australia’s biggest that year. TPG and Carlyle Group (CG:US) bought Australian hospital operator Healthscope Ltd. for A$2.7 billion, including debt, in 2010.

To contact the reporters on this story: Brett Foley in Melbourne at bfoley8@bloomberg.net; David Fickling in Sydney at dfickling@bloomberg.net; Paulina Duran in Sydney at pduran10@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net


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