AUSTRALIA – Australian leading food and dairy processing company, Bega Group, has entered into a business sale agreement to acquire the businesses and specific assets of Betta Milk and Meander Valley Dairy from TasFoods (TAS).
The standout element of the US$11 million deal was identified in the inclusion of perpetual, royalty-free license to use the esteemed Pyengana Dairy brand for milk and cream products across Australia.
The finalisation hinges on receiving approval from the Australian Competition and Consumer Commission (ACCC).
“We recognise the quality in the Betta Milk, Meander Valley Dairy, and Pyengana milk brands, and we are delighted to add these Tasmanian brands to our portfolio,” Bega Group CEO Pete Findlay said.
“Betta Milk is a fantastic regional brand that has been a household name in Tasmania for over 65 years, and acquiring these brands supports our ambitions to become a great Australian food company.”
Meanwhile, Bega Group has booked a hefty impairment charge related to commodity assets in the challenging Australian milk market.
The Bega Cheese brand owner posted a loss after tax of US$147.8 million in fiscal 2023, swinging from an US$15.5 million profit a year earlier.
The publicly-listed company said the loss was significantly impacted by non-cash after-tax asset impairment” of A$230m.
“The strategic decisions over the past five years to transform into a predominantly branded business played a pivotal role” in the year under review,” Bega said in a statement.
The group claimed it had navigated difficult and rapidly changing conditions, while continuing to position the business for future growth.
In the stock-exchange filing, Bega added its decision to right size some of its commodity assets was based around the milk price and over supply.
“The continued decline of milk production in Australia and excess milk manufacturing capacity has created a highly competitive milk procurement environment and a disconnection between returns received from internationally traded commodity markets and Australian farmgate milk price.”
“The non-cash impairment of our bulk commodity assets is reflective of industry circumstances and reinforces the importance of our strategy to transform to a predominantly branded business,” Executive chairman Barry Irvin explained.
In addition, Bega’s normalised EBITDA dropped 11% for the year to US$102.7 million, based on revenue of US$2.1 billion, an increase of 12%.
However, the profit metric is expected to be relatively flat in the new fiscal year at US$102.6 million- US$109 million.