Australian Meat Group acquires Killara feedlot

Australian Meat Group (AMG), a Victoria-based meat processing company, has agreed to acquire Elders’ Killara feedlot for approximately $196 million. This acquisition involves a 1,400-hectare facility located at Pine Ridge, near Quirindi, New South Wales. Killara operates both grain-fed and pasture-based beef production, housing about 62,000 head of cattle. The transaction underscores AMG's expansion strategy in the beef production sector amid a strong investment climate for feedlot ownership.

Elders has owned the Killara feedlot since 2011, during which it contributed a stable revenue stream even in challenging conditions. For the last financial year, Killara added $12.1 million to Elders' earnings before interest and tax. Despite its success, Elders’ managing director, Mark Allison, stated that the sale aligns with their strategy to create shareholder value and enhance Killara's growth under specialized ownership. AMG, led by Joe Catalfamo and Gilbert Cabral, operates processing facilities in Cootamundra, NSW, and Dandenong, Victoria, aiming to further integrate their beef supply chain.

AMG's acquisition marks its latest move to bolster its position by expanding into integrated beef production. The company, founded in 2013, has invested in upgrading facilities like the Cootamundra abattoir, reflecting its strategy to source premium beef from prime Australian grazing regions. For Elders, the sale is expected to provide financial flexibility, reducing debt and returning leverage ratios to more favorable levels. Notably, Elders recently completed a $475 million acquisition of Delta Agribusiness, positioning this divestment as a strategic capital reallocation.

Within the broader beef production industry, AMG's acquisition underscores a trend towards greater industry consolidation, as companies aim to gain efficiencies and enhance production capabilities. By securing Killara, AMG not only strengthens its supply chain but also potentially positions itself as a more formidable player within both domestic and export markets. Elders, meanwhile, is poised to benefit from a strengthened balance sheet and capital tax offsets.

The deal, however, remains subject to approval by the Foreign Investment Review Board and the Australian Competition and Consumer Commission, with Elders anticipating completion by June 30. These regulatory reviews will be crucial in determining if the acquisition proceeds as planned, influencing the competitive dynamics in Australia's beef production sector.