What’s the connection between EMI and James Packer? Seasoned quiz addicts might quickly press their buzzers and shout “Atom Heart Mother”, the Pink Floyd album that featured a grazing cow on its sleeve in 1970. Or perhaps even Animals, another Pink Floyd album released by EMI in 1977. The link is, or rather will be, farming.

Guy Hands, whose Terra Firma investment vehicle owns EMI, wants to make the connection a little more substantial, however. Terra Firma is on the verge of buying Mr Packer’s Australian cattle ranches, which cover an area 2½ times the size of Wales.

The planned deal, for about £200 million, would allow Mr Hands to reduce his private equity firm’s dependence on its underpressure music major by investing in an industry – agriculture – that, unlike music, has a long, established history and a guaranteed future.

Terra Firma is understood to be the preferred bidder for the ranches, which are 90 per cent-owned by Mr Packer, who inherited them from his late father Kerry. The remaining 10 per cent will stay in the hands of Ken Warriner, a friend of the Packer family, who runs the ranches and will remain in charge after the deal is completed.

Mr Hands’s third investment fund raised €5.4 billion from investors in May 2007, and has since bought EMI and Pegasus, the aircraft leasing company. Yet it remains heavily dependent on the fortunes of the struggling music business because EMI represents such a large proportion of the fund. It committed £1.5 billion in equity to the deal.

However, accounts for Consolidated Pastoral Holdings, which owns Mr Packer’s ranches, suggest that the business is also under pressure. The ranches had run up losses of A$765 million since its inception in 1983, including A$20 million last year on revenues of A$37 million – and Mr Packer is asking for A$425 million (£200 million). Demand from Asia for beef and dairy products has helped to push up valuations, while other investors, including Lakshmi Mittal, the steel billionare, are diversifying into Australian farming.

Mr Hands, the founder of Terra Firma, began his buyout career in 1994 at Nomura, before he set up on his own in 2002. His investments have ranged from pubs to cinemas and from off-licences to rubbish tips, but he has not previously bought into agriculture.

James Packer took control of his father’s empire almost three years ago and has since shed some favoured family assets to concentrate on buying and developing casinos in Las Vegas and Macau. His Consolidated Media Holdings sold three quarters of the Nine television network and ACP, the magazine publisher, to CVC Asia Pacific for A$5.1 billion in a two-stage deal in 2006 and 2007.

However, financial problems have hit the tycoon. When Nine and ACP ran into problems, Mr Packer declined to support a rescue and a stake already reduced to 25 per cent was later cut to less than 1 per cent.

It is estimated that his debts total A$1 billion and shares in Crown, where Mr Packer holds 38 per cent, have tumbled in common with his other public investments in financial services and a residual media portfolio. His personal wealth has plunged from A$6.1 billion at the beginning of the year to about A$2.5 billion today.

Mr Packer, 41, takes a close interest in the value of his investments and once made it clear that he judged success by the amount of wealth it was possible to amass.

“He who dies with the most toys wins,” he once said.

International portfolio

Terra Firma controls

EMI - the world's fourth-largest music company. Artists include Pink Floyd, album cover above

Annington Homes - 57,600 homes acquired from the Ministry of Defence in 1996

AWAS and Pegasus - aircraft leasing, with more than 220 planes

Deutsche Annington - lets 230,000 homes in Germany

Infinis - largest purely renewable energy generator in UK

Odeon/UCI - pan-European cinema chain, with 193 sites

Phoenix Natural Gas - energy supplier to Belfast area

Tank & Rast - German service station owner with 90 per cent market share

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