Yesterday lurking in the back pages of the AFR was the news that a major Canadian Super Fund has bought a major stake in Australia’s largest potato-growing business Mitolo Family Farms. The company not surprisingly supplies the likes of Coles (COL), Woolworths (WOW) and Aldi, while currently enjoying revenue of $280mn, our first reaction is what a shame to see this 50-year-old business sold to an offshore entity although no doubt `the press would have been more vocal had it been a Chinese buyer.
This week has also seen United Malt (UMG) surge over 30% after the $1.38bn NSW-based commercial malt operator received a takeover bid from European suitor Malteries Soufflet. We felt the $5 all-cash bid was a solid one although some investors are still questioning if it’s enough – UMG had already rejected bids over the last 4 months of $4.15, $4.50, and $4.90 with the latest offer noticeably only a small increase which suggests to us that they’re running out of patience, remembering we’ve already seen plenty of suitors walk from deals over the last year.
- The 4th bid for UMG was more than 45% above the stock’s previous close posing the question whose wrong, the market or the board.
Importantly UMG Chairman has said that Malteries Soufflet is not the only maltster to approach them since 2022.
MM believes the UMG bid will ultimately prove successful at around $5
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These 2 deals illustrate perfectly that Australia’s food industry is attractive to overseas players and with Super Funds and VCs sitting on literally buckets of cash further deals across the sector wouldn’t surprise MM hence we’ve revisited 3 major names on the ASX.
