AUSTRALIA – Canadian dairy company, Saputo has entered into a definitive agreement to acquire the specialty cheese business of Australia’s Lion-Dairy & Drinks Pty Ltd for US$196.9 million (AUD 280 million).
The sale to Saputo will include all Dairy & Drinks’ specialty cheese brands, including King Island Dairy, Tasmanian Heritage, South Cape, Mersey Valley, Heidi Farm and Australian Gold.
It also includes two manufacturing facilities located in Burnie and King Island, Tasmania (Australia), which employ about 400 people, plus the two Lion-owned farms on King Island (Horizon Glen and Kyeema).
The Melbourne-based dairy company produces and markets a variety of specialty cheeses under a wide portfolio of Australian brands, focused on healthy living trends.
Lion Dairy said that the divestment will put the business in a better position to grow, given Saputo’s deep dairy capabilities, complementary portfolio and commitment to the cheese segment.
“As we worked through the sale process over the last several months, significant bidder interest emerged in both the whole Dairy & Drinks business and also in the specialty cheese assets on a standalone basis,” said Lion CEO Stuart Irvine.
“After a careful assessment of all options, Lion has entered into an agreement to sell the Dairy & Drinks Specialty Cheese business to Saputo.
“Saputo is ideally positioned to drive the business forward, given its deep dairy capabilities, complementary portfolio and commitment to the cheese category domestically.”
Plans to sell the Dairy & Drinks business were unveiled last year and according to Lion Dairy, a non-cash write-down of the business including cheese was called for as a result of the impact of extreme weather on the cost and availability of milk.
The company said the AUD 530 million (US$373.08 million) from its business provides room for a highly attractive portfolio of market-leading brands in growing categories including milk-based beverages, yoghurt and premium juice.
“We are continuing to consider various pathways forward for the balance of the Dairy & Drinks business and will take the time to ensure we achieve the best possible outcome over the coming period,” said Irvine.
For the twelve-month period ended on December 31, 2018, the Specialty Cheese Business generated revenues of approximately AUD192 million (US$135.15 million).
The transaction is expected to complete within the second half of 2019, subject to customary and regulatory conditions.
For Saputo, the deal further strengthens its position in Australia after it acquired struggling dairy business Murray Goulburn for US$1 billion.
It recently completed acquisition of UK’s Dairy Crest for US$1.2 billion.