Minority shareholder IFFCO in bid to stall AACo's deal

17 April 2009

The Australian Agricultural Company (AAco) today clinched a deal with Paraway Pastoral Company for the sale of three Queensland Gulf cattle stations to the latter for $145 million. However, AAco shareholder IFFCO, a Dubai-based food processing company, has thrown a spanner on the proposed acquisition of Litchfield and Tipperary Station in the Northern Territory.

Media reports suggest IFFCO, which holds 15 per cent of AAco's shares is not in favour of the purchase. The proposed move has divided AAco shareholders who will vote on the deal at a special general meeting later this month.

The company plans to purchase the two properties, including 60,000 cattle, for $105 million from barrister Alan Myers. The company has defended the move and in a statement to the stock exchange said that it was a ''strategic fit'' with AAco's property portfolio.

The statement goes on to explain that AAco's acquisition decisions are not taken solely on the financial performance under previous management rather the company's primary focus is on valuation of the asset based on existing carrying capacity, grass type, rainfall, existing infrastructure and development potential. On the basis of these the company was satisfied that the purchase represented good value to the company.

The statement while further elaborating the company's position says that the financial metrics of the stations under acquisition would change substantially once they are integrated into the AAco system.

In the meantime, AAco has completed the $145.7-million deal involving the sale of three Gulf properties plus 53,000 branded cattle, with Paraway, a part of the Macquarie Pastoral Group.