Big beef group could be broken up and sold

by Editor
Friday, February 02, 2007

Australian assets of Swift & Company, Greeley, Colorado, could be pared off and sold separately as the parent U.S. company sells off its assets.

These assets belong to the Australia Meat Holding (AMH), the largest beef company in Australia, with sales in fiscal 2006 of $1.75 billion.

This is one of the scenarios emerging from a recent announcement of the Board of Directors of Swift & Company that it plans a review of its strategic and financial alternatives. In the review process the Swift Board will consider the full range of possible alternatives, including, among others, a possible sale, merger, strategic partnerships, refinancing and/or public equity offering.

Leading U.S. analysts therefore lean towards a scenario where Swift’s three key business units - its U.S. beef and pork processing interests, and Australian processing/lot feeding assets - are sold separately, rather than as a unit.

At least four leading U.S. processing industry stockholders have been linked with interest in all, or part of the Swift enterprise. They include the ‘big three’ U.S. packers - Tyson, Cargill and Smithfield - plus National Beef.

Despite speculation that low-key inspections of AMH assets had already taken place among potential buyers including Cargill and Smithfield, AMH joint chief executive, John Keir, this week denied any visits by potential purchasers had occurred.

Given the recent financial performance of the three Swift divisions, the Australian assets, including four large meatworks with capacity to kill 5700 head a day and four feedlots, could well be among the most attractive to potential buyers, particularly to a group such as Cargill, U.S. analysts say. Cargill already has two Australian beef-processing plants and a feedlot.