Australia's Bindaree Beef Group said Tuesday it sold a major stake to China-listed Shan Dong Delisi Food Co, seizing on a free trade agreement as the Chinese mainland seeks new markets to satisfy its rapidly growing appetite for meat.
In a statement, Australia's fourth-largest meat processor said it sold 45 percent of the company to Shan Dong for A$145 million ($105 million), giving it access to the Shenzhen Stock Exchange-listed rival's sales networks, which reaches some 700 million people.
The deal will be an early test of whether a free trade agreement signed in June between Australia and China, its No.1 export market, will drive up trade now worth over A$100 billion annually.
The FTA will over a decade cut import tariffs on Australian beef completely, from up to 25 percent currently, according to the Australian government.
"With the benefits from the FTA flowing to the Australian beef industry, the opportunity to become a premium beef supplier to China is one that we expect will bring enormous benefits, not just to Bindaree but to Australia's broader beef industry," the Australian firm's CFO, James Roger, said in the statement.
As China's middle class grows, its beef consumption is expected to reach 8 million tons a year by 2020, from 7.25 million tons currently, Bindaree said.
