Synlait has received approval from the Overseas Investment Office to go ahead with its NZ$112 million acquisition of Dairyworks, to be completed 1 April. The deal is said to “accelerate Synlait’s diversification strategy” and scale in the Everyday Dairy category.
Dairyworks provides New Zealand consumers with almost half of its cheese, a quarter of its butter, as well as milk powder and ice cream. Its brands include Deep South ice cream, Alpine and Rolling Meadow.
The deal was first announced in October, where Synlait said Dairyworks would operate as a subsidiary of the company.
Synlait CEO Leon Clement said the acquisition provides Synlait with instant scale in the Everyday Dairy sector, new growth opportunities, and a diversified earnings base for shareholders.
“Dairyworks gives Synlait the opportunity to extract more value from our milk pool and we see strong synergies with our recent Talbot Forest acquisition. We’ll now be closer to the consumer and own more of the value chain,” said Clement.
Dairyworks is expected to make an EBITDA contribution of approximately $4 million in the remainder of FY20 for Synlait, which has an earnings guidance between NZ$70 million and NZ$85 million net profit after tax.
The Dairyworks Christchurch facility and its 230 staff will continue to work following the acquisition.
