Synlait to put Talbot, Dairyworks up for sale

DAIRY and infant formula maker Synlait Milk said it planned to sell its Dairyworks and Talbot Forest Cheese businesses to pay down debt.

The Synlait board and management have been undertaking a strategy and ‘‘capital structure refresh’’, which has included an asset review.

Debtladen Synlait has seen its share price come under downward pressure this year, in part due to investor concern that it may require a capital raise to shore up its balance sheet. The stock last traded at $1.55, down from $3.77 last December.

‘‘To ensure greater focus and execution of Synlait’s overall business strategy, the company intends to evaluate the divestment of Dairyworks and Talbot Forest Cheese,’’ Synlait said.

Synlait, which is a2 Milk’s sole supplier of infant formula, said it had a clear competitive advantage in its advanced nutrition and foodservice businesses.

The company also said it had a ‘‘disciplined and wellrun’’ ingredients business.

The divestment of Dairyworks and Talbot Forest Cheese would enable Synlait to focus solely on growing the highest margin segments of its valueadd, businesstobusiness advanced nutrition and foodservice businesses.

The company said it had ‘‘world class’’ capability and capacity in terms of its current asset bases and knowhow at Dunsandel and Po¯keno.

Synlait chief executive Grant Watson said Dairyworks was an excellent business but said it was not core to Synlait’s strategy.

‘‘It delivers cheese products to various channels under a portfolio of wellknown household brands.

‘‘Despite having extremely strong capability across consumer, brand, customer, and procurement, Dairyworks is not core to Synlait’s diversified growth strategy and does not leverage our core right to win competencies in advanced nutrition and food service.

‘‘Synlait needs to focus on the business units where we have a clear right to win.

‘‘Although the performance of Dairyworks has met expectations the intended divestment of Dairyworks . . . will enable us to help deliver against an increasingly focused strategy.’’

Synlait has engaged investment banking firm Jarden to advise on the divestment.

Should a sale occur, the proceeds will be used to pay down debt, the company said.—