Parmalat seals $70m deal for a slice of National Foods’ dairy assets
National Foods has announced that Parmalat will purchase some of their fresh milk manufacturing operations in New South Wales and South Australia after the competition watchdog requested divestments from the dairy firm when they purchased Dairy Farmers last year.
The deal, which is subject to the approval of the Australian Competition and Consumer Commission (ACCC), will see Parmalat acquire a portfolio of fresh milk assets across the two states, licences to market brands and distribution networks in NSW, SA and the ACT.
When seeking ACCC approval for the $910 million Dairy Farmers takeover, National Foods promised to divest 12 National Foods depots in the NSW and ACT and 13 Dairy Farmers depots in South Australia, as well as transfer the Lidcombe processing plant.
Parmalat, the maker of Pauls milk, will also receive a 2 year licence to manufacture, distribute and sell the Daisy Fresh and Pura range of fresh white milk in NSW and the ACT along with a perpetual licence for the Oak and Just Natural flavoured milk brands in NSW, SA and the ACT. The majority of Dairy Farmers’ fresh white milk brands in South Australia will also be under a perpetual license arrangement.
“The sale and associated brand licensing arrangements are required under divestment undertakings given by National Foods to the ACCC as part of its acquisition of Dairy Farmers last year,” the Kirin-owned subsidiary reported. “Under the terms of the Sale Agreement, Parmalat has agreed to make offers of employment to approximately 95 per cent of employees currently working within the operations it is proposing to acquire from National Foods.”
The manufacturing operations had combined revenue of around $200 million in the twelve months to 30 June 2008, National Foods advised, with tangible assets of around $60 million at that date. As a result, the deal will substantially increase Parmalat’s presence down under, adding almost 26 per cent to their revenue derived from Australian operations – based on last year’s figures.
National Foods Managing Director, Ashley Waugh, said that the integration of National Foods and Dairy Farmers was moving along as planned, with the sale a key step to further progress. “We are pleased to reach agreement on the divestment of these assets following a comprehensive process,” he stated. “The integration of the National Foods and Dairy Farmers businesses continues to progress well and finalisation of these arrangements, which is subject to ACCC approval, will represent another important milestone in the implementation of the acquisition of Dairy Farmers.”
The deal involved a $70 million cash payment “as well as the assumption of certain liabilities”.