Saputo buys further into Australian cheese market

Canada’s biggest dairy processor has reached a deal to buy further into the Australian market, by buying the “everyday cheese” business of Australian beverage and dairy giant Lion.

Saputo on Monday said it had reached a deal for Warrnambool Cheese and Butter Factory, its 88 per cent-owned Australian subsidiary, to buy Lion’s “EDC” business for C$134.4 million cash.

The deal would require approval from Warrnambool’s other shareholders — including Lion, which owns a 10 per cent stake — and is expected to close around the beginning of May, Saputo said.

The EDC business in question employs about 170 people and includes cutting and wrapping, distribution, sales and marketing and intellectual property associated with Lion’s Cracker Barrel, Coon, Mil Lel and Fred Walker brands, generating about $156 million in sales per year.

Warrnambool already owns the building at Allansford where the Lion EDC cut-and-wrap operations are housed, next to Warrnambool’s cheese plant, about 250 km west of Melbourne.

Montreal-based Saputo said Warrnambool, with the Lion business, would be able to “increase its presence” in the consumer-branded everyday cheese products segment in Australia with “strong market positions” in that segment.

The deal, Saputo said, is also “consistent with Saputo’s stated strategy to invest in (Warrnambool) to accelerate its growth in Australia.”

Lion, formed in 2009 under the name Lion Nathan National Foods through the merger of Lion Nathan and Kirin Holdings Co., now operates four divisions: Lion dairy and drinks (LDD), Asia dairy, Australian beer, wine and spirits, and New Zealand beer, wine and spirits.

LDD managing director Peter West, in a separate release, said the company’s decision to sell is “part of our broader three-year strategy to turnaround performance at LDD and drive sustainable profit growth.”

Lion, he said, plans to focus its resources behind its “biggest growth opportunities, which are in higher-value categories such as milk-based beverages, speciality cheese and yogurt.” — Network


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