Scales Corporation has announced the acquisition of an additional 7.5% stake in its U.S.-based subsidiary, Shelby JV LLC (Shelby), for USD 24.4 million. The transaction, which is set to settle on April 16, 2025, will be funded through USD term debt from existing banking partners. Scales' post-settlement gearing is expected to remain at low levels.
Shelby operates in the pet food ingredient sector, with nearly all of its sales directed toward the U.S. market and sourcing raw materials domestically. The company has been part of Scales Corporation's Global Proteins division since 2018. Since the initial investment, Shelby has recorded earnings growth that has outpaced original expectations.
Scales Corporation Managing Director Andy Borland noted that the increased investment reflects Shelby's recent performance and strategic role within the broader group. He pointed to recent developments such as the implementation of longer-term supply contracts, enhanced processing arrangements, and an expanded customer base as contributing factors to Shelby's valuation. He also highlighted the role of Shelby's founder and joint venture partner in the company's ongoing development, including succession planning within the management team.
The company cited several factors influencing the valuation and purchase price, including Shelby's historical and projected earnings, improved operational structure, and alignment with Scales' global branding strategy. Broader market trends in the natural protein pet food ingredient sector, such as increased merger and acquisition activity, were also noted as relevant background for the investment.
Chair Mike Petersen commented that the increased holding is in line with the company's long-term goal of expanding its interests in the Global Proteins division. He added that strengthening the group's presence in the U.S. pet food market is a timely move, given current industry dynamics.
Following the acquisition, Scales Corporation has revised its FY2025 earnings guidance. Underlying Net Profit after Tax Attributable to Shareholders is now expected to fall between NZD 37 million and NZD 42 million. Overall, FY2025 Underlying Net Profit after Tax has been revised to a range of NZD 51.5 million to NZD 58.5 million, while Underlying EBITDA guidance remains unchanged.
For more information:
Scales Corporation
Tel: +64 (0) 3 379 7720
Email: [email protected]
www.scalescorporation.co.nz