The Ridley Corporation Ltd (ASX: RIC) share price is on the rise today. At the time of writing, shares in the agribusiness are selling for $1.10 – up 3.77%. By comparison, the All Ordinaries Index (ASX: XAO) is currently sitting 0.06% higher.
The company comes into focus after announcing the sale of its Tasmanian extrusion facility for nearly $60 million.
Let's take a closer look at today's news.
Ridley company profile
Ridley Corp engages in the production and marketing of stock feed and animal feed supplements. The company provides its animal nutrition solutions to food producers in the dairy, poultry, pig, aquaculture, sheep, and beef industries. Ridley also caters to laboratory animals in the research sector as well as equine and canine markets in the recreational sector.
Why the Ridley share price is rising
Ridley shares are in the green today after the company provided a statement to the ASX advising it "has entered into an agreement for the sale of the Westbury extrusion facility in Tasmania to Gibson's Limited…" for $54.9 million.
Justifying the sale, Ridley called the facility "underutilised" and said the transaction will allow it to "reset" its manufacturing cost base. It goes on to highlight that the move will allow it to better service the aquafeed market. Customers will be serviced via is expanded extrusion facility in Narangba in Queensland.
The sale must still be approved by the ACCC and will require the obtaining of "certain certificates" related to the plant. The company expects the deal to be completed in the first half of FY22. It anticipates making a pre-tax profit of over $7 million from the deal. Investors seemingly approve of the sale, judging by today's Ridley share price.
Management commentary
Ridley Managing Director and CEO Quinton Hildebrand said:
The significant upgrade and expansion of our Narangba, Queensland extrusion facility is due to complete in July 2021. This will consolidate our aquaculture feed production into one facility, providing a more competitive and lower cost supply chain to service the Australian and New Zealand aquaculture industry, including our Tasmanian customers.
Ridley share price snapshot
Over the past 12 months, the Ridley share price has increased by 51.7%. Shares in the company reached a 52-week high of $1.21 in March on the back of a positive broker note from Goldman Sachs. Since then, however, the share price has fallen by 9.1%.
Ridley Corp has a market capitalisation of $351.4 million.
