Australia's largest private equity firm, Pacific Equity Partners, is reportedly among those making a bid for Dunedin-based Mainland Poultry.
In February, Mainland's managing director, Michael Guthrie, confirmed the company had retained ANZ Bank to advise on options for the business, given its capital expenditure requirements.
Shareholders had been considering their options for the investment needed to replace equipment to meet the requirements of the Animal Welfare (Layer Hens) Code of Welfare 2012, which called for the staged phasing out of battery cages in favour of larger colony cage systems or free-range.
At the time, Mr Guthrie said the shareholders had in mind that they were not getting any younger and ''may want to have a pathway to liquidity''. Mr Guthrie did not return a call from the Otago Daily Times yesterday.
The Australian Financial Review's Street Talk column reported Australian private equity firms were lining up to bid, with the business said to be worth as much as $225million.
Among those to have reached the second stage of due diligence were Pacific Equity Partners, Navis Capital, Adamantem Capital, Crescent Capital and Champ Private Equity, although some might drop out. The required capex might be about $60million, it said.
Mainland Poultry has been a locally-owned and operated success story. The country's largest egg supplier was born in 1997, based on an existing hen farm, Otago Poultry, at Waikouaiti.
Prominent Dunedin businessman the late Howard Paterson was a founding shareholder, having identified the benefits of being centrally positioned between the grain-growing regions of North and South Otago, and Southland.
The company is now controlled by Mr Guthrie, with about 76.6% of the shares, while Dunedin businessman Murray Valentine holds about 18% and Jeff Winmill's family owns 5.3%.
Mainland Poultry now straddles production types ranging from New Zealand's largest free-range farm, Woodlands, at Dunback, to its caged operation. Its most recent free-range development is at Waianakarua, to produce eggs to meet increasing customer demand, including from fast-food giant McDonald's.
It produces about one-third of New Zealand's eggs through its egg production business Zeagold Foods, which has the Woodland and Farmer Brown brands, processes eggs products for the food industry and produces a range of animal feeds through MainFeeds.
Craigs Investment Partners broker Peter McIntyre said the report did not come as a surprise. There had been ''news out there'' that private equity firms had been interested in Mainland for a while.
It was the sort of business that private equity firms were attracted to: it was a food business, it had a good name and it had a dominant position in the marketplace.
While some might say it was a rather unexciting business, it was one that had been able to maintain some momentum over a period of time and get larger, with a really good brand name. ''I see it as good news for those that are involved,'' Mr McIntyre said.
There had been a large number of private equity capital raises in recent times. There were a number of private equity players in New Zealand and Australia with ''plenty of cash'' who were looking at businesses of that size to add to their portfolio, he said.
- Additional reporting by BusinessDesk