Dairy

Bega buys Koroit plant

By Country News

Milk processor Bega Cheese has purchased the Koroit milk processing factory from Saputo Dairy Australia.

The sale was forced upon Saputo following concerns from Australia’s Competition and Consumer Commission that the company would control more than two-thirds of milk supply in the western Victoria region, leading to fears it would lessen competition and result in lower milk prices.

Bega will spend $250million on the purchase, which will include average inventory, and the purchase will be fully funded by new and existing bank debt facilities.

As a part of the transaction Bega and Saputo have entered into a milk supply guarantee agreement where Saputo is required to guarantee supply of 300Ml of milk/year until June 30, 2020.

‘‘The Koroit facility will provide us with a significant presence in western Victoria and operational flexibility with our other milk processing sites,’’ Bega’s chief executive officer Paul van Heerwaarden said.

‘‘Importantly the acquisition will support the continued growth of our core dairy business and provide domestic and export customers with an expanded range of products.

‘‘We welcome the 108 employees of Koroit to Bega Cheese.’’

The transaction is subject to ACCC approval.