AUSTRALIAN Agricultural Company is selling five of its Queensland cattle stations, worth $250 million.

Australian Agricultural this morning agreed to sell the properties to  Primary Holdings International, an Australian investment company. The move is designed to reduce debt and provide captital for reinvestment.

Under the deal, Australian Agricultural and Primary Holdings will jointlyt manage the cattle on the five properties.

Investors welcomed the news sending Australian Agricultural's share price up more than 11 per cent, to $1.87 at lunchtime today. Rumours of the property sales helped Australian Agricultural's share price recover steadily last week.

The properties are understood to include Wondoola, Dalgonally, Kalmeta and Canobie, totalling more than 900,000ha.

Australian Agricultural is the largest beef cattle company in Australia, with 24 cattle stations, two feedlots and more than 565,000 beef cattle.

AACo chief executive Stephen Toms said the pairing with PHI, an Australian investment company specialising in agriculture, was a good partnership.

"Their approach to the pastoral industry complements our own and as such it did not take long to realise there was a natural fit," Mr Toms said.

"We had spent some time last year investigating the concept of setting up our own Northern Agricultural Fund, and had gone a fair way down the track until we realised there were other funds on the market.

"A number of interested parties have been knocking on our door and in the end we decided on Primary Holdings International on the basis of value for AACo shareholders, access to funding and complimentary, ongoing arrangements that this relationship will bring."