Warrnambool is Australia’s largest single-site cheese producer, while Bega owns the southern hemisphere’s two largest cheese packing and processing plants.
Bega Cheese chairman Barry Irvin says 15% is the maximum shareholding possible for the listed company, and positions both former co-ops for future domestic and export expansion.
“What both sides said is we wanted to establish a relationship, and I guess the best way to do this is to vote with your feet and make some investments, and put some commitments in terms of myself going onto their board, and see where the world takes us,” he said.
“But at this time it was the maximum we could take, it suited both our needs and Warrnambool’s needs, and it positions us well for the future.”
Bega Cheese says it has financed the purchase through debt, so Bega’s 100 farmer owners have not funded the Warnambool investment by forfeiting cents per litre for their milk.
“This is the purchase of an asset that is funded by debt, it is not the payment for milk out of operating cash flows or profits,” said Mr Irvin.
“The company looks to do what it can during difficult times of drought. We did increase our milk price yet again only a month ago, and we have one of the strongest prices in Australia.”
Source: Efficient Farming
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