Business as usual under merged Teys/Cargill beef venture

Jon Condon, 02/09/2011


Livestock suppliers and international and domestic meat customers will scarcely notice a difference when the new Teys/Cargill Australian processing joint venture is activated on Monday.

For all intents and purposes, it would be business as usual for all stakeholders engaged with either or both of the merger partners, the chairman of the new merged entity, Allan Teys said yesterday.

The 50-50 joint venture between the Teys family and the Cargill organisation will from September 5 operate under the name, Teys Australia – a Cargill joint venture.

The merger will unite the nation’s second and fourth largest beef processors into an industry behemoth with capacity to kill 1.5 million cattle a year in six modern, efficient, well equipped facilities.

Geographic spread of the four Teys and two Cargill processing operations in central and southern Queensland, NSW and South Australia presents opportunities to overcome seasonal and weather-related supply difficulties, and underpin year-round supply to major clients.

Both companies also operate substantial single-site feedlot operations. Teys’ Miamba feedlot on Queensland’s Darling Downs has a capacity of 30,000 head and turnover of 90,000 head each year. Cargill operates the 19,000 head Jindalee feedlot in southern NSW, turning over 55,000 head annually, giving a combined annual grainfed output of around 150,000 head.

While neither partner will have a controlling interest in the new business, the senior management responsibility will rest squarely with the Teys camp – a testament to the depth of experience within the highly successful fourth-generation family-owned enterprise. Teys patriarch Allan Teys will chair the new entity from its headquarters at Beenleigh. Brad Teys will serve as chief executive officer, and Geoff Teys will be responsible for cattle procurement.

Brad Teys said the formation of Teys Australia represented an exciting time for both companies’ employees, suppliers and customers.

The new company’s senior management team will now focus on integrating both businesses and building an enterprise which is committed to the long term prosperity of the Australian cattle industry and its customers.

“It will be evolution, rather than revolution,” Mr Teys said.

“We are very conscious of picking-up and absorbing the best practices of both companies, and both have different strengths,” he said.

“The key attribute of Teys Australia is the people working within the organisation. Teys Australia is a team of talented, loyal and motivated people with vast industry knowledge and a proven track record across the entire supply chain,” Mr Teys said.

“I’m convinced we have the right team to get the job done. Our customers can look forward to a second-to-none suite of products and services which cater specifically for their needs. We’re committed to partnering with our key customers to deliver unparalleled levels of product innovation,” he said.

“The Australian cattle industry produces a range of livestock which are suitable for a wide variety of markets. Whether it is lean manufacturing beef or a steak for the world’s best restaurants or retailers, we can meet that need. Teys Australia will ensure that all these markets are served.”

All current beef brands currently offered to customers, both domestic and export, by the two entities will continue. Product packed out of the Naracoorte and Wagga is likely to be identified under a ‘Teys Southern’ identity (under which separate brands will function), while the plants further north will pack under a ‘Teys Australia’ flag.   

Similarly, cattle price grid formats will remain unchanged, as will the company’s attractive payment terms (payments issued Friday each week, effectively meaning terms of 5-11 days).

Mr Teys stressed that the new company firmly understood that its success was intrinsically linked to that of the Australian cattle producer.

“We intend to continue to strive for efficiencies and leverage a new global marketing reach to the benefit of all,” he said.

Teys Australia will operate a group of assets which are strategically located across the eastern seaboard of Australia. The joint venture is a combination of all beef processing and cattle feeding operations previously run by Teys and Cargill Beef Australia, as well as Teys’ tannery and value-adding facilities, and Teys’ share of its wholesale divisions.

The merged company has reiterated its commitment to continuing to operate all facilities previously run by the two companies.

Because of Cargill’s US origins, the proposed merger was subject to regulatory approvals. Both the Foreign Investment Review Board and the Australian Competition and Consumer Commission gave the union their blessing over the past three months, finding no grounds for concern about market competition, concentration of ownership or related issues.

The geographic spread of both partners’ processing and feedlot infrastructure means there is little duplication or overlap in operations, and a great deal of complementarity of product type and seasonality.

“This merger will create a new entity which is greater than the sum of its parts,” Mr Teys said. “The efficiencies we will achieve in economy of scale and flexibility across the country are really what both parties are seeking.”

For the Teys enterprise, the new alignment with Cargill provides a substantial lift in international marketing clout. Just as the old Australia Meat Holdings company grew an extra leg in its penetration of new international markets after being taken over by Swift/JBS, Teys stands to benefit the same way.

Cargill’s international reach and distribution network has the capacity, well beyond that of Teys, to optimise carcase utilisation in a vast network of overseas customer countries.


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