Monday 13th August 2018
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Scales Corp will sell its bulk liquid storage unit to Taranaki's SBT Group for $20 million as the agriculture group builds up a war chest to seek out new acquisitions.
Christchurch-based Scales said the Liqueo Bulk Storage division reported earnings before interest, tax, depreciation and amortisation of $1.5 million in calendar 2017. While it had "grown well", the operation was "sub-scale" for the wider group and didn't closely match its storage business.
SBT Group has interests in rendering and animal byproducts. It said it's well positioned to grow Liqueo's tallow storage in Hawke's Bay and Timaru, and its new long-term edible storage contract in the South Canterbury town.
"The sale of Liqueo represents the final phase in our current portfolio rebalancing of businesses considered to be less aligned with our refreshed strategy," Scales chair Tim Goodacre said in a statement. "Our refreshed strategy is about adopting a greater focus on pure agri-businesses that play well to our strengths."
Scales has been on the prowl for new agri-businesses which better match its remaining portfolio, having sold its cold storage business for $151.4 million in May. Before today's transaction, analysts predicted Scales had built up capacity to fund $220 million of mergers and acquisitions.
Goodacre said proceeds from the Liqueo sale will be used "to pursue other attractive opportunities in agribusiness, both currently and in the future." There's no plan to return capital to shareholders at present.
Scales said its strengths are in operating a vertically integrated agri-business, participating in export-focused operations, and adding value through connections to the Chinese market.
The shares slipped 0.2 percent to $4.61, having declined 3.4 percent so far this year.
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