Completion of the acquisition is anticipated to occur at the end of January 2021.
In November last year, Kirin Holdings seemed set to sell LD&D to China Mengniu Dairy Company Limited, but in August this year, the Chinese dairy company said it was pulling the plug on the deal.
Australian Government Treasurer Josh Frydenberg had earlier said he had advised Mengniu that the sale of Lion Dairy and Drinks “would be contrary to the national interest.”
The Bega Cheese deal will be funded by a combination of new and extended debt facilities and the proceeds from a A$401m (US$295m) underwritten entitlement offer and placement.
Bega Cheese’s executive chairman, Barry Irvin, said, “We are delighted to announce this acquisition which we believe will create significant value for shareholders. The acquisition delivers important industry consolidation and value creation with synergies across the entire supply chain. The expanded product range, manufacturing and distribution infrastructure and brand portfolio realises our ambition of creating a truly great Australian food company.”
LD&D’s core business is the manufacture, marketing, sales and distribution of milk-based beverages (Dare, Farmers Union, Big M, Masters, Dairy Farmers), yogurt (Yoplait, Farmers Union, Dairy Farmers), chilled juices (Juice Brothers, Daily Juice), cream and custard (Pura, Dairy Farmers), and white milk (Pura, Dairy Farmers, Masters).
LD&D also has Australia’s largest national cold chain distribution network supplying food service and convenience stores. The company has a national manufacturing footprint of 13 sites.
The company also has joint ventures and alliances with Sodima, through a licence to manufacture, market and sell yogurt and dairy desserts under the Yoplait brand in Australia and in some South East Asian markets; Vita International Holdings, through the joint venture company Vitasoy Australia Products Pty Ltd which manufactures, markets and sells plant-based products under the Vitasoy brand; and a longstanding joint venture with Bega Cheese, in relation to Capitol Chilled Foods (Australia), an ACT company that manufactures dairy products in the ACT and distributes and sells those and other products under the LD&D brands and Canberra Milk brand.
The combined business is expected to generate revenue in excess of A$3bn (US$2.2bn).
Bega said the purchase creates a large-scale dairy and foods business with increased product portfolio; builds a complementary consumer packaged goods supply chain and organizational capability; expands its domestic distribution network to include the route channel, through LD&D’s national cold chain distribution network; and strengthens its core dairy footprint.
This means a sizable increase in annual milk intake to 1.7bn liters from 955m liters, expanded product capability into new branded dairy categories such as milk-based beverages, yogurts and culinary (cream and custard), expanded manufacturing and milk collection footprint into new regions including the strategically important region of Gippsland, and a complementary supply profile that provides the opportunity to optimize utilization of milk intake across an expanded manufacturing footprint.
Bega Cheese’s CEO, Paul van Heerwaarden, said, “We are very pleased with the performance of acquisitions made in recent years which are achieving or exceeding our profit targets. The recent company restructure and ERP implementation will allow us to integrate this acquisition and take advantage of the various synergies and growth opportunities across domestic and international markets.”
