Homewares retailer Harvey Norman is buying a 49.9 per cent stake in a dairy company for $34 million. It's a move that one analyst describes as "odd".
Harvey Norman's acquisition of a stake in a dairy farm may be mystifying for some, but not for executive chairman Gerry Harvey.
The homewares retailer has agreed to pay $34 million for a 49.9 per cent stake in Victorian dairy company Coomboona which owns land and farm assets in northern Victoria's Goulburn Valley. The business includes dairy farm operations, along with a pedigree breeding and genetics division.
billionaire Gerry Harvey told The Australian that the investment reflected the tough times in the retailing sector. He said that if Harvey Norman was not making money out of retailing, it would put its money into something else, and other non-retailing investments were under consideration.
Morningstar analyst Farina Parsons said the acquisition was small, but odd.
Diversified conglomerate Wesfarmers operates Coles supermarkets, and businesses including office supplies, home improvement, insurance, resources, chemicals, energy and fertilisers.
Perhaps Mr Harvey was seeking to capitalise on China's growing demand for dairy products, but dairy prices are currently low, Ms Parsons said.
Harvey Norman said its annual net profit for fiscal 2015 rose 26.6 per cent to $268.1 million, partly boosted by property revaluations.
