Bega Cheese to acquire Lion Dairy and Drinks

Australian dairy company Bega Cheese is set to purchase Lion Dairy and Drinks from Japan’s Kirin for $534 million. Emerging from a week-long trading halt, Bega Cheese said the deal would be complete by January.

In November last year, Kirin had lined up a $600 million deal with China’s Mengniu Dairy, however, the deal was blocked on national interest grounds by treasurer Josh Frydenberg. Canadian dairy conglomerate Saputo and financial firm Tanarra Capital were also bidders until recently.

However, it is Lion – the owner of Pura Milk, Dare iced coffee, Vitasoy, Yoplait yogurt and Australia’s largest national cold supply chain network – that will fall into Australian hands.

Bega Cheese says it hopes to raise $401 million by offering 87 million new shares to make the purchase. The new shares will be $4.60 and 180 million worth will be offered to the market, while $220 million will be made available to existing shareholders. Existing shareholders who take up the offer to buy more shares will reportedly be able to purchase one additional share for every four and a half they currently own and will not be able to transfer them to another investor.

Bega Cheese sources fresh milk from suppliers around southern New South Wales and throughout northern and south-west Victoria.The acquisition of Lion expands to include farmers in Western Australia, South Australia, Tasmania and south-east Queensland.

In June, Bega announced $6.40 per kilogram of milk solids (kg/MS) for southern Victorian producers, and $6.55kg/MS for northern Victorian suppliers, while Lion’s Victorian suppliers were offered $6.52kg/MS

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