Saputo in $196m deal for Lion Dairy’s speciality cheese brands

Canadian dairy company Saputo is to acquire the speciality cheese business of Australia’s Lion Dairy & Drinks – its second acquisition in the country in 18 months.

The Montréal-based cheese maker will pay AUD 280 million ($196.9 million) for Lion’s speciality cheese portfolio, marketed under a range of brands including South Cape, Tasmanian Heritage, Mersey Valley and King Island Dairy. The acquisition also includes two manufacturing facilities in Burnie and King Island, Tasmania which, between them, employ approximately 400 people.

In 2018, the business in question generated revenues of approximately AUD 192 million ($134.9 million).

The move bolsters Saputo’s presence in Australia, 18 months after it agreed to pay $1 billion for the struggling dairy business Murray Goulburn. That deal followed months of protracted speculation over Murray Goulburn’s future, and complemented Saputo’s 2014 acquisition of Warrnambool Cheese & Butter.

Warrnambool had already acquired Lion’s everyday cheese business, including brands such as Cracker Barrel and Fred Walker, back in 2015.

In July, Saputo agreed to sell its cheese processing plant in Koroit, Australia to Bega Cheese for approximately AUD 250 million ($184 million) in order to appease anti-trust concerns raised by Australian Competition and Consumer Commission (ACCC).

Its latest move comes just two months after it announced a move for British dairy company Dairy Crest, the maker of Cathedral City and Davidstow cheeses.

In fact, the acquisitions-heavy business, which has been involved in at least nine major plays since the start of 2015, last month appointed Carl Colizza as the new president and chief operating officer of its North American operations in an effort to further support its growth strategy.

A statement released by Saputo read: “The speciality cheese business [of Lion Dairy & Drinks] will enable Saputo’s Dairy Division (Australia) to further diversify its product offering, adding to and complementing its current activities.”

The transaction is subject to foreign investment approval and clearance by the Australian Competition and Consumer Commission, and is expected to close in the second half of the year.