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TasFoods has announced plans to divest its Pyengana Dairy business, a move aimed at reallocating resources to bolster its poultry operations.

The Australian company, which is publicly traded on the ASX, has entered into a non-binding option agreement with its major shareholder, MSC ATF AgFood Opportunities Fund.

According to a filing with the Australian Stock Exchange, the potential sale of the renowned Pyengana Dairy artisan cheese brand is valued at AUD 2 million (approximately $1.3 million), plus inventory.

This transaction, however, is non-exclusive, allowing TasFoods the flexibility to explore additional buyers through a marketing initiative commencing immediately.

AgFood & Associates, the investment arm of MSC ATF, has expressed willingness to collaborate with other interested parties regarding the acquisition of Pyengana Dairy, which has been underperforming since its acquisition in 2017 as part of TasFoods’ diversification strategy. The company cited challenges in achieving performance targets within its existing capital management framework.

In the statement, TasFoods noted that the current corporate structure is not conducive to the growth and scaling of the Pyengana brand. Management believes that a sale will provide Pyengana Dairy the best opportunity for expansion in both domestic and international markets.

Proceeds from the sale are earmarked to enhance TasFoods' poultry supply chain, following the company’s recent AUD 1.3 million acquisition of Redbank Poultry in December 2023, executed through its subsidiary, Nichols Hatchery.

If the option is exercised before mid-September, the sale of Pyengana Dairy is anticipated to conclude by October 31, pending shareholder approval in mid-October. During the transition, TasFoods will continue to manage the dairy operation under a paid service agreement.

Located in northeast Tasmania, Pyengana Dairy has a rich heritage, producing traditional cloth-bound cheddar for over 130 years. However, the brand's integration into TasFoods has not yielded the expected synergies, prompting the company to seek a more suitable ownership structure.

This divestiture follows TasFoods' earlier decision to sell its Shima Wasabi spices business to Hillwood Berries in 2023, part of a broader strategy to streamline operations and enhance shareholder value.

Image credit: © TasFoods