Bega Cheese has announced plans to acquire the Koroit facility formerly owned by Murray Goulburn from Saputo Dairy Australia.
The facility, located in Western Victoria, was formerly owned by Murray Goulburn, prior to its acquisition by Saputo.
Saputo pledged to divest the facility to allay regulatory concerns over competition for raw milk in south-west Victoria and south-east South Australia.
Bega Cheese is paying $250 million for the facility, which processes around 300ML of milk into bulk and retail butter, commodity and retail milk powders and growing up milk powder.
Bega Cheese said it expects the Koroit facility to generate an annualised EBITDA of $20m, assuming the current annual intake of 300ML.
The transaction includes a Transition Services Agreement and a Milk Supply Guarantee Agreement which requires Saputo to guarantee supply of 300ML of milk per annum until 30 June 2020.
The Koroit facility will be integrated into Bega Cheese’s broader network of milk processing facilities, and the company also said there is potential upside from increased milk intake including milk Bega already collects in the region.
Bega Cheese noted, however, that it may take until FY2021 to fully integrate the facility.
“The Koroit Facility will provide us with a significant presence in Western Victoria and operational flexibility with our other milk processing sites,” Bega Cheese CEO Paul van Heerwaarden said.
“Importantly the acquisition will support the continued growth of our core dairy business and provide domestic and export customers with an expanded range of products. We welcome the 108 employees of Koroit to Bega Cheese.”
Bega Cheese’s Executive Chairman, Mr Barry Irvin said, “We are delighted to have acquired the Koroit facility. Bega Cheese has been collecting milk in Western Victoria for almost 10 years and the opportunity to acquire such significant and quality infrastructure will cement our presence in one of the strongest dairy regions in Australia.
“As always, we will look to work closely with dairy farmers to grow supply to the Koroit facility.
“This is another important step in creating an Australian owned dairy and food company that is competitive and efficient in Australia and the world.”
The transaction is subject to ACCC approval.
