Canadian dairy giant Saputo has pledged to divest Murray Goulburn's Koroit facility to allay regulatory concerns over its planned $1.31 billion purchase of the company's assets.
Saputo has lodged a proposed undertaking with the Australian Competition and Consumer Commission (ACCC) in a bid to allay the regulator's concerns over competition for raw milk in south-west Victoria and south-east South Australia.
The ACCC published its Statement of Issues in relation to Saputo's proposed acquisition last week and said a final decision on the deal will be taken on 29 March 29.
According to the statement, the ACCC's preliminary views were that the proposed acquisition would be “likely to substantially lessen competition in the market for the acquisition of raw milk in south-west Victoria and south-east South Australia”.
Saputo (at Allansford) and Murray Goulburn (at Koroit) currently owned the two largest processing plants in the area, the ACCC said. Only Fonterra and some smaller players will remain, which the the ACCC said would result in decreased competition for raw milk and lower farmgate prices for farmers.
On Monday, Saputo announced it had initiated discussions with the ACCC in respect of a divestment plan for the Koroit dairy plant in order to address the ACCC concerns and to obtain the ACCC clearance, and MG announced today that the proposed undertaking to sell Koroit had now been lodged by Saputo.
“The proposed divestment of the Koroit dairy plant by Saputo does not have any impact on the terms of the asset sale, including the consideration to be received by MG from Saputo and Saputo’s previously announced milk supply commitments,” MG said in a statement.
Provided the ACCC grants clearance for the asset sale, the deal still remains subject to the approval of MG’s voting shareholders at an Extraordinary General Meeting in Melbourne on 5 April.
