Following a string of Australian agricultural companies being snapped up by foreign companies, Australian Agricultural Company Ltd (ASX: AAC) could be next.
Just take a look at some recent history…
In February this year, Canadian dairy giant Saputo took majority control over Warrnambool Butter & Cheese Factory Co (ASX: WCB) and holds an 88% stake in the local dairy producer. This was after an epic tussle with Bega Cheese Ltd (ASX: BGA), Murray Goulbourn and Lion. Both Bega and Murray Goulburn gave in and sold out to Saputo, but Lion still holds its 10% stake.
Bega itself has been rumoured to be a potential takeover target for New Zealand dairy giant, Fonterra (ASX: FSF).
Grain and bulk commodities company Graincorp Ltd (ASX: GNC) was the subject of a takeover bid by US agribusiness giant Archer Daniels Midland, but was blocked by the federal government in November last year.
That follows the takeovers of ABB Grain Ltd, AWB Limited and National Foods in the past decade, and the delisting of PrimeAg from the ASX.
It’s certainly clear that Australian food and dairy producers are attractive to foreign investors, given their exposure to a growing global population, and proximity to the world’s largest nations in Asia, including India, China and Indonesia.
Now British billionaire Joe Lewis has increased his stake in AACo, the nation’s largest cattle and beef producer to 26%. Mr Lewis’s Tavistock investment company recently purchased 3% of the company, as per takeover rules that limit the amount of shares a shareholder holding 20% of a company can buy.
But Tavistock appears to be supporting AACo’s new CEO Jason Strong and his vision to become a premium branded beef exporter to Asia and the Middle East. AACo is about to commence operations at its Darwin abattoir any day now, and specialises in grass fed beef, grain fed beef and Wagyu beef production – which is already exported to more than 20 countries around the world.
AACo may have to watch itself though, any misstep in its strategy and Joe Lewis and his Tavistock group may well be there to offer to take control of the company.
Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga
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