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Deal for Tegel could be ready by end of year

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Oct 12 NZPA - A deal for the sale of New Zealand poultry company Tegel Foods could be wrapped up by the end of the year, The Australian newspaper is reporting.

An information memorandum for the group was dispatched on Friday and is expected to stir the greatest interest among large South American and Asian food companies as well as global private equity players.

Brazil's largest beef producer, JBS, its rival Marfrig Alimentos and compatriot Brasil Foods are said to be interested candidates.

From Asia, companies such as China's Bright Food or Singapore's Cerebos Pacific or Olam could add to the bidding.

Tegel was bought by private equity owners Pacific Equity Partners (PEP) from Heinz in 2005. The Tegel website notes that in 2007 PEP sold a third of Tegel Foods to ANZ Bank's private equity arm.

While comparable companies have historically traded on an earnings multiple of between 7.5 and 8 times, it is thought Tegel would be able to attract a multiple closer to 14 times because of its high ebitda margins and low capital spending.

At 14-times earnings, Tegel could fetch about $NZ1 billion, The Australian said, but today The New Zealand Herald reported commentators were dubious about that estimate and had suggested the price could be half that.

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