Murray Goulburn sold to Saputo for $1.3 billion
Australian dairy co-operative Murray Goulburn has announced that it has been bought by Saputo for A$1.3 billion.
Murray Goulburn, formed in 1950 and home to ten processing plants in Tasmania, New South Wales and Victoria is the manufacturer of prominent supermarket brands Devondale, Liddells and Table Cove.
Its acquisition by the Canadian company Saputo comes as a result of the significant debt that exists within Murray Goulburn (MG).
Saputo have said they would finance the acquisition through a new bank loan.
MG chairman John Spark said the weight of debt and significant loss of milk to competitors forced MG’s hand.
The Directors of MG unanimously recommended that shareholders vote in favour of the transaction.
MG dairy farmers to get a say
Normally when a company is being sold, its constitution requires a special resolution to be passed by shareholders.
In MG’s case, this can only occur with the approval rate of 90 per cent in a ballot when more than 0.5 per cent of the company is being sold.
In this current circumstance, MG’s board have decided to put the decision to a ballot of “wet shareholders.”
These are dairy farmers who are currently supplying the company with milk.
The proposed ballot will require a 50 per cent plus one vote majority to pass.
Whilst shareholders get a vote, this also lowers the threshold required for the ballot to be successful.
Under the Saputo deal, farmers will receive 40 cents a kilogram of milk solids extra payment, for milk supplied this financial year.
“Active” suppliers will also be entitled to an additional 40 cents a kilogram “loyalty payment” this financial year, as well as a commitment for milk collection and market pricing into the future.
The deal represented “the best available outcome” for the co-operative according to Spark.
“Securing a sustainable future for MG’s loyal suppliers is of paramount importance to the board. We are pleased with the strong milk commitments as part of Saputo’s offer,” he said.
Saputo already has a large presence in the Australian market
Saputo are a Canadian dairy company committed to strengthening their presence in the Australian market.
This acquisition comes after the company won a bidding battle for Warrnambool Cheese & Butter in 2014.
The company’s other well-known brands in Australia include Coon cheese, Cracker Barrel cheese, Great Ocean Road cheese and milk and Sungold milk.
Its latest deal remains subject to approval by MG voting shareholders, the Australian Competition and Consumer Commission and the Foreign Investment Review Board.
The sale was announced just hours before MG’s annual general meeting in Melbourne, where farmers were said to have voiced their anger over the sale of the company.
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