Fresh from an end-of-year capital raising, Sydney-based Freedom Foods Group has formed another strategic partnership with a Chinese distribution business.
Seamild, a leading oat-based cereal food brand owner and manufacturer, has sourced oats from Western Australian farms for the past decade for processing.
The company, based in Guilin in southern China, has the nation’s biggest oats products manufacturing business.
The two companies will expand the marketing and distribution of Freedom Foods’ cereal products in China, taking advantage of shrinking tariffs on imports which fall to zero by the end of the decade under the China-Australia Free Trade Agreement.
The partnership also intends to expand Seamild’s own oat based cereal product range, sourced from Australia.
Cereals, oat clusters and oats based snacks made under the Freedom brand will be launched in China in the second half of 2017.
Freedom Foods managing director, Rory Macleod, said the deal was further recognition by a major Chinese food group of Freedom’s unique sourcing manufacturing and innovation capabilities in its cereal, dairy and plant-based beverage operations.
Freedom, which posted a net profit of $50.6 million last financial year, concluded a $75m capital raising with institutional and new and existing retail shareholders last month.
The funds were partly to support the company’s investment in a sports and adult nutritional formula venture in Australia and to help team up with a Chinese company in Shenzhen Province to sell its Australia’s Own brand dairy-based products, including infant nutrition lines.
The extra capital is also paying for Freedom’s takeover of the big northern Victorian “long life” milk packaging business, Pactum Dairy Group, at Shepparton in Victoria, which it already half owns.
The plant is expanding into protein powder ingredients, drinking yoghurt and cream production.
Mr Macleod said Seamild and Freedom foods would also look to expand marketing and distribution of branded products and seek out other potential strategic linkages in the future.
The recent capital raising and fresh share allocation saw key Mr Macleod himself spend $237,000 to buy 53,000 shares, taking his total holding to more than 3.2m shares.
Major shareholder Arrowvest, owned by the dairy farming Perich family at Bringelly Pastoral Company, spent more than $5m increasing its stake to more than 111m shares.
Freedom’s share price lifted almost 10 cents to $3.81 after the Seamild announcement, although it remains well below early December highs of $4.86 when additional shares were being issued to fund the capital raising.