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ProTen lifts annual earnings 31% ahead of A$211M takeover vote

Monday 10th September 2018

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ProTen, Australia’s largest independent contract grower of broiler chickens for meat, increased annual earnings 31 percent ahead of next month's vote on a A$211 million takeover offer.

The Sydney-based company lifted normalised earnings before interest, tax, depreciation and amortisation to A$25.5 million in the year to June 30, from A$19.4 million a year earlier, it said in a statement. Its shares last traded at $1.60 on New Zealand's USX market, lagging behind the A$1.65 a share takeover offer from Australian superannuation fund First State Super. 

ProTen, whose history stretches back to a single shed developed by Max Bryant in Halcombe in 1987, has been ramping up development of chicken sheds in New South Wales and Western Australia, and its website says its operations now span 268 sheds across 16 farms, producing 68 million birds a year and representing 11 percent of Australia's production. The value of its investment property lifted 6.1 percent last financial year to A$280.7 million, and the company announced it has spent A$33.5 million on a further four farms in South Australia this month.

The company has long-term supply contracts with Baiada Poultry, Australia's biggest chicken processor, and has previously considered expanding its corporate chicken farming model beyond Australia and into Asia.

ProTen's directors have unanimously recommended the takeover offer from First State Super announced last month. Chair John Signal said the board has been looking at how to raise capital to fund future growth, including raising equity or increasing debt, and has concluded the sale to First State Super is in the best interests of shareholders, representing a "significant premium" to its share price. The takeover is scheduled for a shareholder vote on Oct. 30 to coincide with the company's annual meeting, and if successful would be completed in November under a scheme of arrangement.

The takeover offer is valued at A$211 million based on the number of ordinary shares, employee incentive plan shares and warrants, with an enterprise value of A$371 million including debt.

On a net profit basis, ProTen's earnings last financial year slipped to A$16 million from A$18.3 million . It recorded a A$4.8 million gain on the value of its investment property portfolio, smaller than the A$10.9 million gain booked a year earlier. 


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