Global partners spend big on Aussie agriculture with $400m meatworks deal

Brazilian meatpacker Minerva Foods and junior partner Saudi Arabia's SALIC have paid almost $400 million for the Australian Lamb Company.

The purchase will give the group about 15 per cent of Australia's lamb and sheep market.

The pair bought two sheep-focused meat processors in Western Australia for almost $48 million last year with plans to expand their operations.

Minerva and SALIC immediately announced further plans to expand their involvement in Australian agriculture.

The pair formed a joint venture, Minerva Foods Australia, "aimed at the possible acquisition of assets in Australia ... focused on breeding, farming, processing and exporting sheep and cattle in that country".

The Australian Lamb Company operates meatworks at Colac in western Victoria and in Sunshine, Melbourne.

The company says it exports to more than 70 countries worldwide and Minerva said it had a slaughtering capacity of 3.78 million animals per year.

It is a privately owned company managed by John Verrall and Denis Zarpellon together with a board made up of Darren Verrall, Ben Verrall, Andrew Berry, Jason McPhail and Dale Smith.

The Melbourne-headquartered company bought the Colac meatworks in 2015.

SALIC is the Saudi's state agricultural fund, and also owns the 210,000ha Merredin Farms in WA.

MORE READING: ACCC halts plans to takeover timber plantations.

Shark Lake and Great Eastern Abattoir have been the group's first buyup.

The export-licensed Shark Lake Food Group Abattoir is located at Monjingup near Esperance on WA's southern coast.

It was owned by the Central Agri Group owned by Melbourne-based businessman Rami Koyu which has operations in Victoria (Trafalgar) and the Northern Territory.

His group already sells Halal product into the Middle East.

The Great Eastern Abattoir is located at Tammin, about 200km east of Perth, and is also export licensed and trades to the Middle East, Africa and South East Asia among others.

The abattoir, formerly owned by private company Westone Pty Ltd, exports frozen and chilled sheep, lamb and goats and is said to be Australia's largest meatworks of its kind.

The new owners say both plants will be operated in a joint venture with Minerva Foods holding 65pc and and SALIC 35pc.

The purchase deal includes the abattoirs and "investment to improve plants structure".

"When operating in full capacity, the plants are expected to reach a slaughter capacity of one million head per year," the new owners said.

In a notice to investors, majority owner Minerva said Australia was the world's leading exporter of sheep meat processed products.

At the time, it said Australia was globally recognised for its tradition and high-quality food products, accessing not only several high-growth markets, such as Asia and the Middle East, but also premium markets like the United States, Europe, Japan and South Korea, among others.

"In line with its strategic guideline and focus on food security, SALIC currently engages in sheep breading and fattening in Australia, allowing us to improve operational efficiency of the new assets," a Minerva statement read.

"Additionally, Minerva Foods, through its trading operation based in the region, with expertise in the sale of sheep and greater focus on the consumer markets of Asia and the Middle East, will substantially contribute to the commercial structure of the new operations."

SALIC, fully owned by the Public Investment Fund, has already bought up about a third of Minerva Foods.

Minerva is the second-largest exporter in Brazil and produces more than one million tons of meat annually.

SALIC's aim is to shore up food security system in Saudi "by creating a series of sustainable agricultural investments in multiple geographic regions".

"The company believes Australia uniquely complements our operations in South America, maximising sales opportunities and operating synergies, reducing risks and contributing to our strategy of consolidation in the animal protein export market."

"The acquisition of ALC in partnership with Minerva Foods is in-line with SALIC's strategy to contribute to the national food security objectives through global diversified investments in countries with competitive advantage such as Australia," Sulaiman Al Rumaih, CEO of SALIC group said.