Elders’ Killara Divestment Risks Minimal EPS Hit but Raises Growth Questions
Elders Limited has agreed to sell its Killara Feedlot to Australian Meat Group for nearly $196 million, aiming to reduce net debt and support its leverage targets with minimal earnings impact.
- Sale of Killara Feedlot for approximately $195.8 million
- Killara contributed $12.1 million EBIT in FY25
- Transaction subject to regulatory approvals
- Proceeds to reduce Elders’ net debt and leverage
- Minimal forecasted impact on earnings per share
Strategic Divestment
Elders Limited has announced a significant divestment, agreeing to sell its Killara Feedlot business to Australian Meat Group Pty Ltd for an estimated $195.8 million. Killara, a major integrated grain-fed and grass-fed beef production facility located in the Liverpool Plains region of New South Wales, has been a valuable asset within Elders’ portfolio, processing around 62,000 head of cattle annually on 1,402 hectares of freehold land.
The sale reflects Elders’ strategic decision to streamline its operations and focus on core areas, while providing Killara with an owner more aligned to its growth trajectory. Elders’ Managing Director Mark Allison emphasised that the transaction supports the company’s broader value creation strategy and thanked Killara’s management and employees for their contributions.
Financial and Operational Impact
In the 2025 financial year, Killara contributed $12.1 million to Elders’ underlying earnings before interest and tax (EBIT). The feedlot’s non-working capital assets were valued at $45.5 million as of 30 September 2025. Importantly, Elders holds capital tax losses of $107.4 million, which are expected to fully offset any capital gains arising from the sale, mitigating tax implications.
The consideration includes $122 million in cash plus normalised working capital, predominantly cattle inventory, which was valued at $73.8 million at the last reporting date. Elders plans to apply the sale proceeds to reduce net debt, aiming to bring its accounting leverage below 2.0 times, a key financial target for the company. The transaction is forecast to have less than a 1% negative impact on earnings per share on an annualised basis.
Regulatory and Timing Considerations
The sale is contingent on approvals from the Foreign Investment Review Board and the Australian Competition and Consumer Commission. Elders expects to complete the transaction before 30 June 2026, depending on the timing of these regulatory clearances. Meanwhile, Killara will be classified as an asset held for sale and a discontinued operation in Elders’ half-year 2026 financial statements, signalling its imminent exit from the group’s operational portfolio.
Looking Ahead
This divestment marks a pivotal moment for Elders as it recalibrates its business focus and balance sheet. While the sale reduces operational scale in beef production, it enhances financial flexibility and positions Elders to pursue future growth opportunities with a stronger leverage profile. Investors will be watching closely for how Elders reinvests the freed-up capital and whether further portfolio adjustments are on the horizon.
Bottom Line?
Elders’ Killara sale sharpens its financial position but raises questions about its next strategic moves.
Questions in the middle?
- How will Elders redeploy the capital freed from the Killara sale?
- What impact will the divestment have on Elders’ long-term growth in beef production?
- Could regulatory approvals delay or alter the terms of the transaction?
