DELICATESSEN meats processor Primo is to be sold for $1.45 billion to the meat processing and export giant, JBS Australia in a strategic value-adding move set to aid its Asian market growth.
The Primo Group, the largest processed ham bacon and smallgoods business in Australia and New Zealand, owns the Primo, Hans and Beehive brands and key processing operations in five locations.
Primo, established in NSW by the Lederer family in 1985, has been majority owned by Asia-Pacific based equity fund manager Affinity Equity Partners for the past three years.
Assuming regulatory approvals are granted, Affinity has described JBS as "the logical owner for Primo".
The JBS takeover is the first major move into the pork sector by the big red meat processor, and set to take advantage of Primo Group's growing export operations across Asia, including China.
JBS said the purchase was consistent with the global strategy of Brazilian parent company JBS S.A. to grow its presence in value-added products.
JBS is the world's largest processor of fresh meats.
'Outstanding opportunity': Batista
JBS chief executive officer Wesley Batista said the acquisition strongly aligned with JBS' global strategy to expand its presence in the value-added product category with well-known brands.
"Primo Group is the leading company in this segment with strong brands and represents an outstanding opportunity to grow our business in Australia and internationally," Mr Batista said.
"We are seeing strong annual growth in consumption of processed meat products with good prospects to increase exports of high quality convenience products from the Primo Group's portfolio."
Primo chief executive officer Paul Hitchcock welcomed the planned sale to JBS.
"While it will remain very much business as usual for our 3000 employees, suppliers and customers, this transaction offers tremendous opportunities for a producer of high quality products like Primo," he said.
"We look forward to being part of JBS and capitalising on its international distribution network."
Primo was started at the former Plumrose tinned ham plant at at Homebush in Sydney by smallgoods entrepreneur and Hungarian migrant Andrew Lederer.
Mr Lederer had previously jointly established and built up the Presto Meat company, selling to Adelaide Steamship for about $12 million in 1980.
The Primo business grew rapidly to become a leading producer of ham, bacon and smallgoods under the Primo and Hans brands, but after Mr Lederer's death 70.1 per cent of the business was sold to Affinity in late 2011 in a deal which valued the company at $740 million.
Since then, Primo has built a state-of-the art high-care food manufacturing facility at Wacol, Queensland, the largest in Australia, as well as acquiring NZ's Premier Beehive business.
Primo's export sales over this period have also grown significantly, with further opportunity for expansion within and beyond Primo's current markets in Asia.
Affinity Equity Partners' Australia and NZ head, Brett Sutton, said the sale of Primo Group to JBS would facilitate the next phase of growth for a great Australian business.
"Paul Lederer, his family and employees built an iconic Australian business and brand and we have been honoured to have been part of Primo's journey," he said.
Affinity's investment and knowledge of regional markets has helped to make the business even stronger with a growing export operation, investment in state-of-the-art plant operations and expansion into NZ.
"JBS, whose core business is processing protein products for the world, will position Primo for even stronger growth over the longer term."
Andrew Marshall
National agribusiness writer for Fairfax Agricultural Media.
National agribusiness writer for Fairfax Agricultural Media.
