Canadian agribusiness Saputo will acquire Australian dairy producer Murray Goulburn for $1.31 billion, in a deal announced on October 27.
Fellow Australian producer Bega was rumoured last week to be in front in the bidding for the struggling MG, but Saputo has now been confirmed as the winner via a binding agreement.
MG chairman John Spark said the Saputo bid represented “the best available outcome for ours suppliers and investors”.
“Saputo is one of the top ten dairy processors in the world and active in Australia through its ownership of Warrnambool Cheese & Butter,” Spark said.
“This transaction will crystallise real value for MG’s equity, whilst rewarding our loyal suppliers through the milk supply commitments.”
The deal includes the transfer of commitments to suppliers totalling roughly $114 million, along with a 40c per kilogram increase in the milk solids price to $5.60/kg, for milk supplied from November 1.
The transaction still requires approval by MG’s shareholders, the ACCC, and the Foreign Investment Review Board.
Spark said the company’s poor financial position had forced the sale.
“MG has reached a position where, as an independent company, its debt was simply too high given the significant milk loss,” he said.
“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.
“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.”