Sector News

Canada's Saputo mulls dairy sale to get Murray Goulburn deal over line

March 7, 2018
Food & Drink

Saputo, the Canadian dairy giant hoping to buy Australian co-operative Murray Goulburn, has signalled a willingness to sell a Victorian plant that the competition watchdog deemed a barrier to the deal.

The Murray Goulburn plant is in the town of Koroit near Warrnambool, only about 30 kilometres away from Warrnambool Cheese and Butter’s plant at Allansford. Saputo is the owner of Warrnambool Cheese and Butter.

The ACCC last week said Saputo’s acquisition of the Koroit facility would substantially lessen competition for milk produced in western Victoria.

The ACCC last week said Saputo’s acquisition of the Koroit facility would substantially lessen competition for milk produced in western Victoria.

In a statement on Monday morning, Saputo addressed concerns raised last week by the Australian Competition and Consumer Commission, which said Saputo’s acquisition of the facility would substantially lessen competition for milk produced in western Victoria.

Saputo said it had “initiated discussions with the ACCC in respect of a divestment plan for the Koroit dairy plant in order to address the ACCC concerns and to obtain the ACCC clearance”.

ACCC chairman Rod Sims said last week the watchdog was concerned that the inclusion of the Koroit plant in the deal “would ultimately lead to lower prices being paid to dairy farmers in the region”, leaving them “worse off”.
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Mr Sims told Fairfax Media that if Saputo obtained the Koroit plant it would make it “dominant in terms of price and dominant in terms of their ability to dictate to farmers how and what they do”.

“So these are serious concerns. And to jump to the bottom line, if they want to proceed with the transaction and basically pick up 70 percent of Murray Goulburn they can do that, we’re clearing that, but that means letting go of Koroit,” he said last week.

Asked if there was a way the deal could go ahead with the Koroit plant still in the transaction, he said: “As things sit at the moment, I’d say no.”

Murray Goulburn shocked many of its long-standing farmer suppliers when it announced in October last year that it had agreed to sell to Saputo for $1.31 billion.

By Darren Gray

Source: The Sydney Morning Herald

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