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Australian Dairy Farms Group to expand with new acquisitions

Australian Dairy Farms Group to expand with new acquisitions

Australian Dairy Farms Group (ASX:AHF) has entered into binding call option agreements to acquire 3 producing dairy farms  for around $16 million.

The Target Farms named Brucknell 4, Elingamite and Nirranda are located in close proximity to AHF’s existing farms, in Southwest Victoria.

The exercise of the options remain subject to AHF signing off on advanced due diligence and successful completion of a $17.7 million capital raising.

The acquisition is transformational, with annual milk production expected to double from 10 million litres per annum to over 20 million litres per annum, making it one of the largest milk producers by volume in Southwest Victoria.

This will result in significant economies of scale, thus reducing production costs and increasing profit margins.

The purchase price includes land and improvements, plus livestock, and the acquisition expected to be 25% EPS accretive at current milk prices.

The capital raising comprises a $15.7 million conditional placement, and a $2 million share purchase plan, priced at $0.20.

The Group intends to begin paying dividends and distributions in FY16; tax assessable income earned by the Australian Dairy Farms Trust must be distributed to security holders to limit adverse tax consequences.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX emerging companies with distribution in Australia, UK, North America and Hong Kong / China.

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