Scales sells liquid storage unit

AUCKLAND: 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.

Christchurchbased 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 ‘‘subscale’’ for the wider group and did not closely match its storage business.

SBT Group has interests in rendering and animal byproducts. It said it was well positioned to grow Liqueo’s tallow storage in Hawke’s Bay and Timaru, and its new longterm 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 chairman Tim Goodacre said.

‘‘Our refreshed strategy is about adopting a greater focus on pure agribusinesses that play well to our strengths.’’

Scales has been on the prowl for new agribusinesses which better match its remaining portfolio, having sold its cold storage business for $151.4 million in May. Before yesterday’s transaction, analysts predicted Scales had built up capacity to fund $220 million of mergers and acquisitions.

Mr Goodacre said proceeds from the Liqueo sale would be used ‘‘to pursue other attractive opportunities in agribusiness’’. There was no plan to return capital to shareholders at present. — BusinessDesk