Canadian dairy company Saputo has agreed a CAD 1.29 billion ($1 billion) deal for Australia’s struggling dairy business Murray Goulburn.
It will expand Saputo’s presence in Australia after the acquisition of Warrnambool Cheese & Butter in 2014, which Murray Goulburn was also interested in at the time, followed by a deal for Lion Dairy’s remaining stake in Warrnambool this year.
The deal brings an end to months of speculation regarding the future of Murray Goulburn, with Fonterra the most recent company to have declared an interest in the debt-ridden business: Murray Goulburn reported net revenue of AUD 2.49 billion ($1.9 billion) for its 2016/17 fiscal year – down 10%, which it said was due to a decline in liquid milk sales.
But it also reported a net loss of AUD 370.8 million ($283.5 million) and has total debts of AUD 445 million ($340 million).
The price represents between AUD 1.10 and AUD 1.15 ($0.84–$0.88) per share, a premium of around 75% or 80% on Murray Goulburn’s undisturbed share price. The transaction is expected to be completed in the first half of 2018.
Murray Goulburn chairman John Spark said: “The board believes that the transaction represents the best available outcome for our suppliers and our investors. Saputo is one of the top ten dairy processors in the world and active in Australia through its ownership of Warrnambool Cheese & Butter (WCB). This transaction will crystallise real value for MG’s equity, whilst rewarding our loyal suppliers through the milk supply commitments.
“MG has reached a position where, as an independent company, its debt was simply too high given the significant milk loss. Securing a sustainable future for MG’s loyal suppliers is of paramount importance to the board. We are pleased with the strong milk commitments secured as part of Saputo’s offer to reward this loyalty. Saputo has demonstrated itself to be a credible and trusted partner for Australian dairy farmers through its investment in WCB. The transaction has the unanimous support of the MG board.”
Murray Goulburn produces a range of dairy products including drinking milk, milk powder, cheese, butter and dairy beverages, as well as a range of ingredient and nutritional products such as infant formula. It supplies the retail and foodservice industries globally with its flagship Devondale, Liddells and Murray Goulburn Ingredients brands.
The company has approximately 2,300 employees and operates 11 manufacturing facilities in Australia and China.
A Saputo statement read: “The acquisition of Murray Goulburn will add to and complement the activities of Saputo’s Dairy Division (Australia). By acquiring a well-established industry player, the company reinforces its commitment to strengthen its presence in the Australian market.
“Saputo intends to continue to invest in its Australian platform and contribute to the ongoing development of its domestic and international business.”
© FoodBev Media Ltd 2021
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