Bega Cheese has sold its spray drying and finishing facilities to Mead Johnson Nutrition to fund its purchase of Mondelez’ Australian grocery business.
The company will sell one of its spray dryers at Tatura and its infant formula finishing plant at Derrimut for $200 million.
As a part of the transaction, Bega Cheese has secured a 10 year service and access agreement with Mead Johnson for the spray dryer and finishing plant.
Bega Cheese’s executive chairman, Barry Irvin said the sale of the dryer and finishing plant together with the ongoing relationship with Mead Johnson, which makes more than 70 products under its Enfa brand, was strategically and financially important for Bega Cheese.
“It secures revenue streams from these assets and releases capital which will be used to fund our recent purchase of Mondelez’ Australian grocery business including Vegemite,” he said.
Bega Cheese’s chief executive officer, Paul van Heerwaarden said, “Bega Cheese’s ability to continue to access the spray dryer and finishing plant together with its other spray drying assets means we can continue to supply our many valued customers.”
Beleaguered dairy company Bellamy's Organic, which has a manufacturing contract with Bega, told shareholders that the contract with Bega remains in place, but because China will require that its infant formula products are registered with the China Food and Drug Administration (CFDA) from 1 January 2018, this may change.
“As a result of Bega’s sale to Mead Johnson Nutrition, Bellamy’s may need to seek CFDA registration discussions with other manufacturers, as well as Bega,” the company said.
“Bellamy’s has multiple alternatives available, including accessing the CFDA registration of an alternative canning line that currently produces Bellamy’s products.”
Bellamy’s said it remained confident it could achieve registration of its infant formula product in time.
