ACCC Ticks Saputo, Murray Goulburn Deal

By Glenn Dyer | More Articles by Glenn Dyer

Saputo’s proposed acquisition of Murray Goulburn assets will go ahead after the ACCC gave the deal the tick of approval following its acceptance of a court-enforceable undertaking from Saputo to divest Murray Goulburn’s Koroit plant in southwestern Victoria.

The Koroit plant was the only hurdle the ACCC identified in the $1.3 billion deal announced last October and Canadian dairy company, Saputo is now confident that it can finalise the purchase of MG’s operating assets and liabilities by the start of next month.

Saputo chairman and chief executive Lino Saputo Jr said yesterday in a statement “we are very pleased” with the ACCC approval.

“This is an important milestone in the process of completing our acquisition of MG,” he said. “We now await the Foreign Investment Review Board’s decision and the results of the MG shareholder vote.”

"We remain confident in our offer and expect to be able to finalise this transaction by 1 May 2018. Our goal remains to continue to invest in Australia with a long-term perspective and ensure we have a strong and sustainable dairy industry.”

The ACCC had competition fears about the Koroit plant as Murray Goulburn and Saputo, which owns Warrnambool Cheese and Butter, both acquire milk from farmers in south-west Victoria and south-east South Australia, including in areas around Warrnambool and Mt Gambier.

The ACCC had raised concerns that competition would have been reduced for farmers with Saputo owning the region’s two largest plants, both near Warrnambool, its current Allansford plant and Murray Goulburn’s Koroit plant/ That could have led to dairy farmers being paid less at least in the medium term.

In response to the ACCC’s concerns, Saputo offered an undertaking that it would divest the Koroit plant within a specified period to a buyer which will need to be approved by the ACCC.

“Saputo’s divestiture undertaking has remedied the ACCC’s competition concerns about the Koroit plant,” ACCC Chairman Rod Sims said yesterday.

“The undertaking creates an opportunity for a viable competing milk processor to enter or expand in the local region. When approving a new owner of Koroit, we will focus on its ability to be a strong and effective competitor for raw milk in the region.”

“The ACCC has carefully considered responses from a broad range of market participants about Saputo’s undertaking and the broader transaction.”

“We heard from and spoke with many farmers who expressed concerns with the ACCC intervening in this transaction in the short term because they wanted certainty and stability after a bumpy ride with Murray Goulburn.

"I want to assure them that our aim is to put in place an outcome that works in their best interest by promoting competition in the medium to longer term while minimising short term uncertainty,” Mr Sims said.

The undertaking also includes details of transitional milk supply arrangements and independent management for the plant until it is sold.

Murray Goulburn has confirmed that Saputo divesting Koroit will not impact on the terms of Murray Goulburn’s asset sale to Saputo, including the consideration Murray Goulburn shareholders will receive from the sale.

The sale of the Murray Goulburn assets to Saputo is subject to conditions that include approval by an ordinary resolution of Murray Goulburn’s voting shareholders and approval by the Foreign Investment Review Board.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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