Elders (ASX:ELD) announced a binding agreement to sell 100% of its shares in Killara Feedlot to the Australian Meat Group for approximately $195.8 million.
The divestment marks a shift for the agricultural giant, offloading a premier beef production facility located in the Liverpool Plains of New South Wales.
Killara, which spans 1,402 hectares and boasts an annual throughput of 62,000 head of cattle, has been described by Elders CEO Mark Allison as a "blue-chip operation" that has found a more "natural owner" in AMG.
From a financial perspective, the deal is strategically timed. Despite Killara contributing $12.1 million to underlying EBIT in FY25, the sale allows Elders to bolster its balance sheet.
The company intends to apply the proceeds toward reducing net debt, aiming to bring accounting leverage below 2 times.
Elders expects the capital gain from the sale to be fully offset by $107.4 million in carried-forward capital tax losses, maximising the net benefit to shareholders.
While the sale is forecast to result in a minor reduction of less than 1% to earnings per share on an annualised basis, the move provides substantial long-term financial flexibility.
The transaction remains subject to regulatory approvals from the Foreign Investment Review Board and the Australian Competition and Consumer Commission.
If approved, Elders anticipates the sale will conclude by June 30, with Killara being reclassified as a discontinued operation in upcoming financial statements.