Bega Cheese announced Thursday, 26 November, that it has entered a binding agreement to buy Japanese-owned Lion Dairy and Drinks businesess for $534 million.
The deal, which will expand Bega’s branded product portfolio, includes Australia’s largest cold chain distribution network supplying food service and convenience stores.
Bega will be acquiring 13 factories across Australia, 3 national distribution centres and big name dairy product brands including Dare, Farmers Union, Big M, Masters and Dairy Farmers milk-based beverages; Yoplait, Farmers Union and Dairy Farmers yoghurts ; Juice Brothers and Daily Juice chilled juices; Pura and Dairy Farmers cream and custards; and Pura, Dairy Farmers and Masters white milk.
In a statement, Bega Cheese executive chairman Barry Irvin said they believed the acquisition will create significant value for shareholders. “The acquisition delivers important industry consolidation and value creation with synergies across the entire supply chain,” Irvin said.
The deal comes after Chinese dairy company Mengniu quit its bid to purchase the assets back in August when Treasurer Josh Frydenberg blocked the sale.
Bega Cheese’s acquisition, which comes at a nearly $70 million discount compared to the Chinese bidder’s offer, is expected to generate revenue in excess of $3 billion for the Aussie company.
Including separation costs, the net acquisition price represents a gross sale price of $560 million.
The deal is set to strengthen Bega’s dairy footprint through a sizable increase in annual milk intake to 1.7 billion litres from 955 million litres.
Bega Cheese CEO Paul van Heerwaarden, said they are very pleased with the performance of acquisitions made in recent years which are achieving or exceeding their profit targets. “The recent company restructure and ERP implementation will allow us to integrate this Acquisition and take advantage of the various synergies and growth opportunities across domestic and international markets,” Heerwaarden said.
The deal is due to be completed by late January 2021.