Saputo will sell plant to address ACCC concerns

By Jim Cornall contact

- Last updated on GMT

Murray Goulburn, which produces the Devondale brand, says Saputo will address ACCC comments by divesting the Koroit plant to allow the takeover of Murray Goulburn to continue.
Murray Goulburn, which produces the Devondale brand, says Saputo will address ACCC comments by divesting the Koroit plant to allow the takeover of Murray Goulburn to continue.

Related tags: Murray goulburn, Investment

Following the Australian Competition and Consumer Commission’s (ACCC) comments over a potential lack of competition should Saputo’s purchase of Murray Goulburn go ahead, the Canadian company has said it will sell the plant in question so its takeover can occur.

The ACCC’s issues relate to Murray Goulburn’s Koroit dairy plant in western Victoria​, with respect to the impact the acquisition may have on competition for farmers’ milk in the area.

Saputo has advised MG that Saputo has lodged a proposed undertaking with the ACCC in respect of a divestment plan for the Koroit plant in order to address ACCC concerns and to obtain ACCC clearance.

According to Murray Goulburn, the proposed divestment of the Koroit plant by Saputo will have no impact on the acquisition price of approximately A$1.31bn (US$1.02bn) to be paid by Saputo.

Net value per share increased

Murray Goulburn said, following the completion of its reviewed 1H18 accounts and the preparation of an updated management forecast for the remainder of FY18, its estimate of the net value per share/unit, which shareholders and unitholders could receive from the asset sale over time, has been increased.

The revision in estimated net value per share/unit reflects MG’s expectation of lower debt levels at the completion of the sale. This is a result of lower capital expenditure given the reduction in MG’s milk intake and improved outcomes against previous assumptions for the sale of Edith Creek.

The company said the estimated net value per share/unit of the asset sale has been increased to A$1.15-A$1.20 (US$0.89-US$0.93)from A$1.10-A$1.15.

The sale remains subject to approval by the Foreign Investment Review Board (FIRB).

Subject to Murray Goulburn obtaining shareholder approval and receipt of FIRB approval, the cooperative said it expects the sale to be completed on May 1, 2018.

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