Private equity firms in race to acquire Australian poultry processor Inghams

Two private equity firms, US-based Blackstone and Hong-Kong based Affinity Equity Partners, are likely to make a bid for Australia’s leading poultry processor Inghams Enterprises.

The indicative bids for the business are expected to be launched next week and the expected price for the sale is around A$1.4bn ($1.42bn), which is about six or seven times Ingham’s fiscal 2013 earnings.

Global buyout companies and international trade buyers are also showing interest over the acquisition of Inghams, reported the Sydney Morning Herald.

The sale is likely to be finalised before the end of 2012.

In July 2012, Ingham’s only shareholder Bob Ingham put the business up for sale and appointed Investec Bank to handle the divestment.

It was reported that the everyday operations of Inghams will continue as usual under the direction of CEO Kevin McBain and his team until a deal is finalised.

The sale process will be closely evaluated by the Australian Competition and Consumer Commission (ACCC), as both Inghams and rival poultry firm Baiada, whose main customers include Coles and Woolworths respectively, control 75% of the 834,000t/yr chicken meat market in Australia.

Australian food companies have been attracting interest from private equity firms and other Asian buyers over the past two years due to strong sales despite a slowdown in the economy.

Inghams, which owns the Ingham Chicken brand, produces chicken and poultry products and operates across Australia and New Zealand.

The company’s expected earnings before interest, tax, depreciation, and amortisation for 2013 are nearly A$200m ($204.25m).