Montreal-based Canadian dairy company Saputo has reached a deal to buy Murray Goulburn Co-operative — Australia’s largest milk processor — in a deal worth $1.3 billion, including the Australian company’s debt.
Debt aside, the deal is reportedly worth around $488 million.
Murray Goulburn produces a full range of dairy products, including milk, milk powder, cheese, butter and dairy beverages. The company has 2,300 employees and 11 manufacturing facilities in Australia and China.
In addition to bolstering Saputo’s Australian presence, the deal could also open doors for Saputo into Asia. The Australian co-op went public in 2015, using the funds to expand into China. However, the expansion did not go as well as expected.
“The board believes that the transaction represents the best available outcome for our suppliers and our investors. Saputo is one of the top ten dairy processors in the world and active in Australia through its ownership of Warrnambool Cheese & Butter,” said Murray Goulburn chair John Spark, in a statement.
“MG has reached a position where, as an independent company, its debt was simply too high given the significant milk loss. Securing a sustainable future for MG’s loyal suppliers is of paramount importance to the Board. We are pleased with the strong milk commitments secured as part of Saputo’s offer to reward this loyalty,” continued Spark.
The proceeds from the sale will be used to pay Murray Goulburn’s farmer suppliers higher milk payments, as well as for paying down debt.