$151m sale proceeds go to exporter’s acquisition hunt
The country’s biggest apple exporter, Scales Corporation, is selling its cold-store businesses, Polarcold Stores and Whakatu Coldstores, for
$151 million to an overseas buyer. The deal gives an acquisition war chest to Christchurch-based Scales, which began life more than
100 years ago as a shipping company but now employs more than 700 people in its businesses, which include pet food, cold stores, and Mr Apple in Hawke’s Bay.
Sharebrokers view Scales as a success story since it was listed on the New Zealand stock exchange in
2011, from the receivership of South Canterbury Finance.
The company’s share price rose immediately before and after the latest announcement by Scales managing director Andy Borland, going from $4.43 at the end of April to $4.85 a share.
Scales accounts for about 25 per cent of New Zealand’s apple crop and it is expected to make new investments in related businesses.
The buyer of the cold-store businesses was Emergent Cold, which also recently acquired the Swire cold-storage assets in Australia and Vietnam.
The deal requires approval by the Overseas Investment Office.
Borland said Scales was approached by Emergent Cold because Polarcold Stores fitted its broader strategy of acquiring and developing a global network of cold chain businesses.
Scales chairman Tim Goodacre said Scales was adopting a greater focus on pure agribusiness investments.
Last year Scales’ returns – measured on capital employed – from storage activities were lower at 11 per cent versus 20 per cent for other business divisions.
Scales will be focusing on its exports to China in partnership with its 15 per cent cornerstone shareholder China Resources Ng Fung.
The deal will eliminate $40m of Scales’ debt and leave it with $110m in cash.
In 2017 the company earned revenue of $399m, with the cold-store operation accounting for $53m.
‘‘At this stage there is no intention to return capital to shareholders. Rather, the proceeds are intended to be used to pursue other attractive opportunities in New Zealand agribusiness,’’ Goodacre said.
Scales was advised by Maher & Associates (lead sale adviser) and Anthony Harper (legal). Emergent Cold was advised by Russell McVeagh (legal) and Grant Thornton (financial).