Australia-Multi million dollar cattle deal falls through.

AUSTRALIA-ARAB FARM DEAL LOOKS IN DOUBT.

A deal by beef-producing behemoth Australian Agricultural Company to buy two major cattle stations from Melbourne barrister Allan Myers, QC, could fall through due to opposition from a Dubai-based shareholder.

IFFCO Poultry, with a 14.9 per cent stake in AACO, says it will vote against the purchase of the Northern Territory stations for $105 million because an experts’ report into the deal provided scanty financial information.

"The information that we have received was inconclusive and grossly insufficient," IFFCO director Arunis Povilas Paliulis said. "Other investors and institutions share our view."

The Australian stock exchange ruled shareholders must approve AACO’s purchase because it involves a related party. In February, major shareholder Futuris agreed to sell a 19.9 per cent stake to Mr Myers for $89.8 million. That was conditional on Mr Myers selling his Tipperary and Litchfield stations to AACO.

Meanwhile, IFFCO bought 14.9 per cent of the company from Futuris and has agreed to acquire another 5 per cent.

Futuris will still hold 25 per cent of shares but cannot vote on the purchase deal at the extraordinary general meeting on April 27.

Risk Metrics, which advises institutions with about 10 per cent of the vote, is believed to have advised against the purchases.

"We haven’t even been able to look at cash flow statements and earnings details," said another investor, who declined to be named.

BT, with about 4.8 per cent of the vote, has expressed its scepticism. "We’re looking at it in detail," said portfolio manager Noel Webster. "The board that is in place is essentially reflective of the majority shareholder (Futuris) that’s exiting the register, and this transaction is one that facilitates that exit.

"We feel like the independent expert report was a little bit short on information, when the board should be going the other way."

IFFCO also said it did not believe the purchases fit with AACO’s corporate strategy. "IFFCO’s view … is that AACO should seek to reduce debt, increase cattle-carrying capacity and enhance its revenue streams and profitability by investing in downstream activities, such as an abattoir, and by selling more of boxed beef as compared to live cattle for better margins," it told the market.

AACO is the biggest beef cattle company in Australia . Its shares fell 1.73 per cent yesterday or 3¢ to $1.70.

business.theage.com.au