CK Life Sciences buys Australia's Cheetham Salt for A$150m

Li Ka-shing firm buys Cheetham of Australia for A$150m, giving it a wider geographical coverage and sparking a rally in its shares

PUBLISHED : Friday, 30 November, 2012, 12:00am
UPDATED : Friday, 30 November, 2012, 3:38am

The share price of CK Life Sciences Int'l jumped 8.3 per cent to 65 HK cents yesterday after the company bought an Australian salt company for A$150 million (HK$1.22 billion).

CK Life, 74.8 per cent owned by Li Ka-shing and his elder son, Victor Li Tzar-kuoi, is engaged in health and agriculture products, and the water business.

CK Life said yesterday it had signed an agreement to fully acquire Cheetham Salt from Australian-listed Ridley Corp. The sale price is lower than the more than A$240 million reported in The Australian newspaper on March 6.

Cheetham is Australia's largest producer and refiner of salt, with business in Indonesia, a joint venture in New Zealand and a sales office in Japan, its website says. Cheetham sells salt in Australia, New Zealand and various parts of Asia, CK Life said.

"The acquisition will deepen the company's agriculture-related business in Australia," it said. "Cheetham is the leading supplier of salt in Australasia. It has significant infrastructure and land which enable it to maintain a strong competitive advantage.

"Cheetham will bring to the company a strong recurrent cash flow, enlarged geographical coverage and product portfolio, a more diverse customer base and growth opportunities in Asian markets."

Excluding extraordinary items, Cheetham's net profit rose 30 per cent to A$4.34 million in the past financial year to June. Its net asset value was A$166.8 million as of June 30.

Ridley chairman John Spark said: "The decision to sell Cheetham is the culmination of a process announced in February to identify alternative strategies to unlock the value of the Cheetham business. This sale transforms Ridley into a focused animal nutrients, ingredients and feed producer."

In February, Ridley and its adviser Barclays Capital reviewed the salt business, The Australian reported. It quoted Ridley's chief executive, John Murray, a former Cheetham boss, as saying it was "a hard decision" to sell the firm.

"We've spent a long time getting that business in very much better shape than it was some years ago," Murray said. "But there comes a time when my role as managing director of a listed company is to make sure shareholder value is achieved, and I thought the market was certainly not reflecting that value."

In January, CK Life acquired another Australian firm, Peaty Trading, for A$31.34 million.

CK Life's net profit surged 40 per cent to HK$115.6 million in the first half, while turnover rose 33 per cent to HK$2.3 billion.

The Cheetham acquisition was subject to the approval of the New Zealand Overseas Investment Office and was expected to be completed by February next year, Ridley said.