Aussie dairy Warrnambool to acquire Lion everyday cheese business


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Aussie dairy Warrnambool to acquire Lion everyday cheese business

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Saputo-owned Warrnambool Cheese and Butter (WCB) has agreed to acquire the "everyday cheese" business of Australian rival Lion Dairy and Drinks (LDD) for AU$137.5m (US$107m, €95m).

Once completed, WCB will assume ownership of LDD cheese brands, including Coon, Mil Lel, and Cracker Barrel, and take control of LDD cut and wrap operations in Allansford, Victoria.

The building, which is owned by WCB and adjacent to a WCB cheese plant, currently serves both companies.

lion cheese
WCB is set to acquire LDD cheese brands, including Mil Lel, Coon, and Cracker Barrel.

The LDD business, which generates revenue of approximately AU$160m (US$124.5m, €111m) and employs around 170 people, will "enable WCB to increase its presence in consumer branded everyday cheese products segment in Australia," ​said WCB in a statement.

The transaction is subject to WCB shareholder approval, but it is unlikely to face any opposition.

Canadian dairy giant Saputo, which controls an 87.92% stake in WCB, is "supportive of the transaction and has advised WCB that it will vote its shares in favour of the transaction."

Of the remaining 12.08% of shares in WCB, Lion owns 10.2%.

WCB and LDD expect to complete the deal in late in April or early May following a shareholder meeting. 

"Turnaround strategy"

LDD plans to reinvest the proceeds of the sale in its "turnaround strategy."

"We are focusing resources behind our biggest growth opportunities, which are in high-value categories such as milk-based beverages, speciality cheese and yoghurt,"​ said Peter West, managing director, LDD. 

"We believe this deal appropriately values the business and delivers a win/win for all stakeholders - including our people, the Allansford community, local farmers, customers and consumers,"​ West added.

Saputo secured it majority shareholding in WCB in January 2014 following a three-way bidding war between it, Bega Cheese and Murray Goulburn. 

During a February 2014 call with analysts, Lino Saputo, CEO, Saputo, indicated that it planned to build on its interest Down Under.

"I'd say that now with Warrnambool we have a strong solid platform in Australia,​" said Saputo. 

"Perhaps there could be some other small tuck-in businesses in Australia we would be more than happy to look at now that we have a management team there that would be able to absorb it and manage it and run it,​" he said. 

Related topics Manufacturers Cheese Consolidation

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