Tassie ben­e­fits from MG sale

Tasmanian Country - - NEWS -

THE planned sale of milk pro­ces­sor Mur­ray Goul­burn to Cana­dian com­pany Sa­puto Inc should help ease un­cer­tainty for Tas­ma­nian sup­pli­ers.

In a state­ment to the Aus­tralian Se­cu­ri­ties Ex­change, Mur­ray Goul­burn an­nounced it has en­tered into a bind­ing agree­ment with Sa­puto Dairy Aus­tralia for the sale of the com­pany for $1.3 bil­lion.

While a cloud still hangs over the fu­ture of the Edith Creek pro­cess­ing fac­tory, the pro­posed deal should give Tas­ma­nia’s MG sup­pli­ers some con­fi­dence.

As part of the sale agree­ment Sa­puto would take on MG’s sup­ply com­mit­ments worth $114 mil­lion.

This will al­low sup­pli­ers to re­ceive a price step up of $40 cents a kilo­gram of milk solids for milk sup­plied from Novem­ber 1, tak­ing the full year price to $5.60c/kg/Ms.

If the deal goes ahead there will also be a back pay­ment for milk sup­plied from July through to Oc­to­ber.

Ex­ist­ing MG sup­pli­ers will also re­ceive an ex­tra 40c/kg/ Ms loy­alty pay­ment.

Sa­puto al­ready has a strong pres­ence in the Aus­tralian dairy in­dus­try af­ter buy­ing the War­rnam­bool Cheese & But­ter busi­ness in 2014.

The Sa­puto deal was unan­i­mously rec­om­mended by the MG board and if ap­proved will be fi­nalised in the first half of 2018.

MG chair­man John Spark said the board be­lieved that the sale rep­re­sented the best avail­able out­come for the com­pany’s sup­pli­ers and in­vestors.

“Sa­puto is one of the top 10 dairy pro­ces­sors in the world and ac­tive in Aus­tralia through its own­er­ship of War­rnam­bool Cheese & But­ter,” he said.

Mr Spark said MG has reached a po­si­tion where, as an in­de­pen­dent com­pany, its debt was sim­ply too high given the sig­nif­i­cant milk sup­ply loss.

“Se­cur­ing a sus­tain­able fu­ture for MG’s loyal sup­pli­ers is of paramount im­por­tance to the board,” he said.

“We are pleased with the strong milk com­mit­ments se­cured as part of Sa­puto’s of­fer to re­ward this loy­alty.”

Be­fore the sale can be fi­nalised it must be ap­proved by the Aus­tralian Com­pe­ti­tion and Con­sumer Com­mis­sion and the For­eign In­vest­ment Re­view Board.

Tas­ma­nian Farm­ers and Gra­ziers As­so­ci­a­tion dairy coun­cil chair­man Andrew Lester said over­all the pro­posed sale was a good out­come.

“When you look at if from an Aus­tralian based co-op point of view it is a shame, but that’s about the only neg­a­tive I can see with it,” Mr Lester said.

“As far as the sup­plier share­hold­ers are con­cerned, I think with the sit­u­a­tion MG had got it­self into, this was prob­a­bly the best op­tion they could hope for.”

The deal must also re­ceive ap­proval from MG’s vot­ing share­hold­ers be­fore it can go ahead.

“We don’t know at this stage if it's go­ing to be ac­cepted and I guess if an­other of­fer came for­ward they would have to con­sider that too,” Mr Lester said.

“The prices they’re of­fer­ing to sup­pli­ers now are com­pet­i­tive. The pre­dic­tions for next year aren’t over­fly pos­i­tive and there will be some chal­lenges there, but they are not go­ing to be as big as the chal­lenges would be if things con­tin­ued how they were with MG in its cur­rent struc­ture.”

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