Sydney’s under-the-radar Topper family is opening its books to private equity firms and other potential buyers, in a bid to realise a whopper payday at its eponymous tanning business AI Topper.
Sydney’s under-the-radar Topper family is opening its books to private equity firms and other potential buyers, in a bid to realise a potential whopper payday at its eponymous tanning business AI Topper.
Street Talk can reveal the Toppers have had Grant Samuel’s bankers mustering potential buyers into an auction, telling them the shareholders are looking for a deep-pocketed new investor or owner that could help grow their company’s footprint. AI Topper makes about $45 million EBITDA a year from the producing, processing and exporting semi-processed and finished hides, skins and leathers.Interested parties were told AI Topper was making about $150 million annual revenue and $45 million in earnings before interest, tax, depreciation and amortisation, fuelling expectations of a $300 million-plus asking price. Sources said it was the first time they’d been given a close look at the company, which was founded in 1954 and is with its third generation of Topper-family owners. AI Topper was set up as a merchant trader and has become one of Australia’s biggest producers, processors and exporters of semi-processed and finished hides, skins and leathers. It has processing facilities in Queensland, NSW, Victoria and South Australia.The bankers pitched AI Topper as market leader in Australia’s animal hide and skin industry, with the largest range of value-added products in the country and a “recognised leader in sustainably sourced and processed leather”, according to a document seen by Street Talk. The pitch also said AI Topper had an extensive list of domestic and offshore customers, a reputation for quality and consistency and long-term supplier relationships and facilities in key cattle-producing regions.Potential buyers have started digging into the business, trying to work out whether to get involved in the auction and what they may be willing to pay for the company. The key thing in their mind is whether demand for leather and similar goods has peaked, with the rise of eco-conscious consumers, and vegan leather used for cars, shoes and the like. Data provider IBISWorld reckons Australia’s leather and leather substitute market has seen declining profitability in the past five years, largely due to falling demand. It said demand from export markets had rapidly declined, while niche leather producers were expanding production and accessing new markets. IBISWorld reckons AI Topper is the No.2 player in Australia with 11.7 per cent of the leather market. Schaffer Corporation, which is listed on the ASX and supplies leather to the automotive manufacturing sector, is marginally bigger with 11.8 per cent of the market, on IBISWorld numbers. co-edits Street Talk, specialising in private equity, investment banking, M&A and equity capital markets. He has 10 years' experience as a business journalist and worked at PwC, auditing and advising financial services companies.
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