Synlait receives approval for Dairyworks acquisition

By Jim Cornall contact

- Last updated on GMT

Dairyworks supplies New Zealand consumers with cheese, butter, milk powder and ice cream.
Dairyworks supplies New Zealand consumers with cheese, butter, milk powder and ice cream.

Related tags: synlait, acquisition

Synlait Milk Limited says the Overseas Investment Office in New Zealand has granted consent under the Overseas Investment Act 2005 to its purchase of the shares in Dairyworks Limited.

As Overseas Investment Office consent was the only condition attached to Synlait’s purchase of the shares in Dairyworks, arrangements can now be made for settlement on April 1, 2020.

Dairyworks specializes in the processing, packaging and marketing of dairy products.  Dairyworks supplies New Zealand consumers with almost half of its cheese, a quarter of its butter, as well as milk powder and ice cream.

Synlait CEO Leon Clement said, “This acquisition accelerates the execution of Synlait’s Everyday Dairy strategy. It provides us with instant scale in the sector, new growth opportunities, and a diversified earnings base for our shareholders.

“Dairyworks gives Synlait the opportunity to extract more value from our milk pool and we see strong synergies with our recent Talbot Forest acquisition. We’ll now be closer to the consumer and own more of the value chain.”

Dairyworks CEO Tim Carter said, “Dairyworks and Synlait are a logical fit. We’re likeminded companies with a shared passion for doing things differently in the dairy sector. This is an exciting opportunity for us to work with Synlait to keep growing Dairyworks. It’s a great fit.”

Synlait said Dairyworks is expected to make an EBITDA contribution of approximately NZ$4m (US$2.4m) in the remainder of FY20. This translates to a net profit after tax contribution of approximately NZ$2m (US$1.2m), after borrowing costs and depreciation.

Synlait reiterated it remains comfortable with its full year 2020 earnings guidance range, which is between NZ$70m-$85m (US$42.3m-51.4m) net profit after tax.

The conditional purchase of shares in Dairyworks for NZ$112m (US$67.6m) was announced in October 2019.

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