Sa­puto ac­quires MG

The Cobram Courier - - NEWS - By Vivi­enne Duck

Em­bat­tled dairy pro­ces­sor Mur­ray Goul­burn is sell­ing up shop.

The for­mer Aus­tralian dairy gi­ant on Fri­day en­tered in to a bid­ding agree­ment with Sa­puto Dairy Aus­tralia, which will ac­quire all of MG’s op­er­at­ing as­sets and li­a­bil­i­ties for $1.31 bil­lion.

For the trans­ac­tion to go through, ap­proval from vot­ing share­hold­ers, the ACCC and FIRB and com­ple­tion of other cus­tom­ary con­di­tions are needed.

This is ex­pected to be com­pleted by the mid­dle of next year.

The an­nounce­ment, which came just hours be­fore MG’s an­nual gen­eral meet­ing, was met with mixed feel­ings by sup­pli­ers and share­hold­ers.

MG chair­man John Spark said the board be­lieved the trans­ac­tion rep­re­sented the best avail­able out­come for 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 and But­ter,’’ he said.

‘‘This trans­ac­tion will crys­tallise real value for MG’s eq­uity, whilst re­ward­ing our loyal sup­pli­ers through the milk sup­ply com­mit­ments.

‘‘MG has reached a po­si­tion where, as an in­de­pen­dent com­pany, its debt was sim­ply too high given the sig­nif­i­cant milk loss.’’

Mr Spark said se­cur­ing a sus­tain­able fu­ture for MG’s sup­pli­ers was 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,’’ he said.

‘‘Sa­puto has demon­strated it­self to be a cred­i­ble and trusted part­ner for Aus­tralian dairy farm­ers through its in­vest­ment in WCB.

‘‘The trans­ac­tion has the unan­i­mous sup­port of the MG board.’’

The trans­ac­tion will also in­clude a sweet­ener for active MG sup­pli­ers to­talling about $114 mil­lion.

This will en­able a step up of 40¢ per kilo­gram milk solids (kgMS) to $5.60 per kgMS for milk sup­plied from Novem­ber 1 and, on com­ple­tion of the trans­ac­tion, for milk sup­plied from July to Oc­to­ber 2017.

It also en­ables an ad­di­tional 40¢ per kgMS loy­alty pay­ment in the 2018 fi­nan­cial year for active MG sup­pli­ers.

MG sup­pli­ers will also ben­e­fit from a series of com­mit­ments from Sa­puto en­sur­ing milk col­lec­tion and mar­ket pric­ing into the fu­ture.

MG sup­plier di­rec­tor Craig Dwyer said at the an­nual gen­eral meet­ing that some sup­pli­ers could see this deal as ‘‘far from ideal’’.

‘‘I signed up to fix MG, not to sell it,’’ he said.

‘‘The re­al­ity hit us and forced our hand. This is not where we want to be but where we are.

‘‘Af­ter con­ver­sa­tions with the Fed­eral Govern­ment the de­ci­sion was reached that it was not an in­dus­try prob­lem but an MG prob­lem.’’

Mr Dwyer said the sale would en­sure cer­tainty for MG’s wet sup­pli­ers.

‘‘This deal en­sures there is a fu­ture for Mur­ray Goul­burn farm­ers go­ing for­ward,’’ he said.

MG will re­tain all as­sets and li­a­bil­i­ties as­so­ci­ated with the MG Unit Trust and any li­a­bil­ity in re­la­tion to the cur­rent ACCC pro­ceed­ings, ASIC in­ves­ti­ga­tion, unit holder class ac­tion and any sim­i­lar ac­tions.

MG will re­tain part of the pro­ceeds of the trans­ac­tion un­til the con­clu­sion of these mat­ters.

The Na­tional Union of Work­ers, which is the union for MG work­ers, has cau­tiously wel­comed the sale.

‘‘The NUW hopes this gives work­ers and their com­mu­ni­ties some cer­tainty as they go for­ward,’’ Vic­to­rian sec­re­tary Gary Maas said. ‘‘The NUW al­ready works pro­duc­tively with Sa­puto at its War­rnam­bool Cheese and But­ter Plant.

‘‘It is sad, how­ever, to see a co-op­er­a­tive that has served farm­ers, work­ers and com­mu­ni­ties well for decades dis­ap­pear.

‘‘Mur­ray Goul­burn has suf­fered from pre­vi­ous mis­man­age­ment, the demise of which can be traced back to the de-mu­tu­al­i­sa­tion push a few years ago.

‘‘We ex­pect that they (MG work­ers) will con­tinue to make the high qual­ity prod­ucts that we love through any ap­proved ac­qui­si­tion by Sa­puto.’’

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