Guy Hands buys Australian cattle business from Terra Firma

The deal is reportedly worth approximately A$500 million ($351 million). Terra Firma bought the business from local billionaire James Packer in 2009 for EUR327 million ($382 million). CPC announced in October 2019 that negotiations were underway with Hands and his family, who were looking to provide the cornerstone commitment for a management buyout of CPC.

Formed in 1983 through the purchase of Newcastle Waters Station and some smaller Northern Territory holdings, CPC is the largest private cattle company in Australia, with 3.2 million hectares of land and a carrying capacity of 300,000 head of cattle. It is a vertically integrated operation, with two feedlots in Indonesia and direct channels for selling cattle and beef into Asian consumer markets.

At the time of Terra Firm’s investment, CPC had 17 cattle stations covering 5 million hectares. The company now has nine stations, though the carrying capacity is unchanged, according to its website. The website also states that CPC has an enterprise value in excess of A$850 million.

“CPC is a high-quality, well-run business with a strong position in a large and growing industry and close proximity to major beef-consuming markets. Even in Australia, where beef-industry standards are among the highest in the world, CPC stands apart for its commitment to protecting the environment, animal welfare, investing in people, good relations with Indonesia, and innovation,” Hands said in a statement.  

He added that CPC is a good fit for his family office’s other long-term investments, which cover forestry, hotels, and a winery in Tuscany.

CPC had total assets of A$921.5 million as of March 2019, having produced 34.6 million kilograms of beef over the preceding 12 months. Revenue came to A$128.5 million, down from A$140.9 million from the previous year, while EBITDA rose from A$34.3 million to A$36.2 million. Over the same period, the company swung from a net profit of A$15.8 million to a loss of A$800,000.

Troy Setter, CEO of CPC, stressed the importance of having “long-term, patient capital” to invest in the business. Others have taken a similar view of the Australian beef industry, as demonstrated by QIC’s 2016 purchase of an 80% stake in North Australian Pastoral (NAP) for A$400 million. The goal is to build supply chains into demand centers across emerging Asia.

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• Topics
• Australasia
• Exits
• Buyouts
• Consumer
• Industrials
• Australia
• Agriculture
• Terra Firma