Multinational conglomerate Chevalier Group is close to completing a deal to acquire a sizeable shareholding in major Australian grower-packer-marketer Moraitis Group.
A report in today’s Australian Financial Review said the Hong Kong-listed group, which has diverse business interests ranging from cars to construction, is in exclusive negotiations to buy part of the Moraitis family’s 50 per cent stake in Moraitis Group and part of the 49 per cent controlled by private equity firm Catalyst Investment Managers.
Citing sources close to Moraitis, the Australian business daily said Catalyst had been in exclusive talks with Chevalier for “some time”, and that a syndicate of banks led by Commonwealth Bank had arranged financing for the deal.
Asiafruit understands from industry sources that the deal, which could be concluded by the end of October, values the Moraitis Group at more than A$225m.
Founded by Nick Moraitis 55 years ago as a potato distribution business, Moraitis has evolved to become a leading supplier of fresh produce to the Australian retail market. The group runs national growing, packing, wholesaling, ripening and pre-packing operations in the potato, onion, hydroponic tomato and banana markets.
Catalyst Investment Partners purchased a 49 per cent stake in Moraitis in 2006, and since then the group has witnessed rapid expansion. Over the past five years, revenues have increased by some 220 per cent to exceed A$550m, Asiafruit understands. Most of that expansion, which equates to a compound annual growth rate of 17 per cent, has been achieved organically through the group’s new business model.
Last year, Moraitis shareholders appointed Ernst & Young to help assess strategic options for the group with a view to selling part of, or all of, the business. According to the Australian Financial Review, Catalyst is understood to have had discussions with Chinese companies such as Bright Foods, which owns Manassen and Sunbeam, and state-owned entity COFCO, which owns Tully Sugar.
Contrary to some perceptions in Australia, Chevalier’s interests in Moraitis do not appear to centre on using the company as a vehicle to acquire farmland in the country. Rather, Moraitis represents a good investment for the Chevalier in its own right, not least thanks to the strong business model the company has established in distributing product from farm to shelf in Australia and in supplying value-added products.
Chevalier has signalled plans to expand Moraitis's domestic business while at the same time seeking to leverage on its distribution systems and technologies to drive a Moraitis expansion into China and other emerging markets in Asia.
According to industry analysts, if these plans are executed, Australian growers technically stand to benefit through greater efficiencies in the domestic distribution system and through potentially wider access to overseas markets.
With negotiations at a critical stage, Moraitis executives are remaining tight-lipped on developments. Director Paul Moraitis declined to comment to the Australian Financial Review on Wednesday, simply stating that “nothing had been signed” while CEO Jeff Jackson could not be reached by Asiafruit for comment.