Canadian cheese boss, Lino Saputo (junior), expects his Montreal-based company will take control of Australia’s biggest dairy processor’s factories in less than a month.
Suputo Inc needed just 50.1 per cent of Murray Goulburn co-operative shareholders’ support its $1.3 billion offer, but when it finally came to a vote in Melbourne today the North American dairy giant won an overwhelming 98.1pc consent for the sale.
Saputo expects to take over seven factories, related assets and staff on May 1, assuming it gets Foreign Investment Review Board consent this month.
“We are delighted by the outcome of the MG shareholder vote at today’s extraordinary general meeting,” said company chairman and chief executive officer, Mr Saputo.
We are committed to contributing to the sustainability of the Australian dairy industry and look forward to building strong relationships with our suppliers by treating them fairly
- Lino A. Saputo (Jr), Saputo Inc.
“We sincerely thank MG shareholders for their support and confidence.
“We are committed to contributing to the sustainability of the Australian dairy industry and look forward to building strong relationships with our suppliers by treating them fairly, with respect and loyalty.”
Mr Saputo said the company, started by his father and cheese maker grandfather in 1954, was confident in the offer it had made and its ability to meet FIRB requirements.
The deal received the green light from the Australian Competition and Consumer Commission yesterday, so long as Saputo makes timely moves to sell the Koroit milk plant, just down the highway from its Warrnambool Cheese and Butter (WCB) plant in south western Victoria.
“We expect to be able to finalise a transaction by May 1,” Mr Saputo said after the vote.
However, vocal criticism of the overseas takeover was quick to emerge from North Queensland federal Member for Kennedy, Bob Katter.
“You’re watching the colonisation of Australia by the corporations,” he said.
The 65-year-old Murray Goulburn co-op is the parent company to the big Devondale dairy brand and other products names including Liddells lactose-free milks.
Three years ago it processed more than 3.6 billion litres of milk, but supplies have are down to less than a third of that volume since the company triggered a dairy pricing crisis in 2016.
Sale spoils divided
MG members have also voted for an 80 cents a share distribution to MG shareholders, and an 80c capital return to non-voting shareholders in the MG unit trust.
The trust floated on the Australian Securities Exchange three years ago as part of the company’s ill-fated export and domestic production expansion moves.
MG chairman John Spark told shareholders Saputo had shown itself to be a credible and trusted processor in Australia through its investment in WBC.
He was confident it would honour all its commitments to suppliers.
Once the transaction is completed MG will continue as a shell company holding certain non-operating assets and liabilities – essentially cash, retained litigation and a number of subsidiary companies that are not part of the operating business acquired by Saputo.
Legal costs linger
The MG co-operative retains about $200 million from the Saputo sale proceeds to pay for legal costs and to pay for the legal action sparked following its decision to cut and recoup farmgate payments late in the 2015-16 season after previously promising above market prices to its farmer suppliers.
MG will continue to own the “responsible entity”, which will continue as the trustee of the MG Unit Trust, eventually wound up at the end of current litigation proceedings against the company,
Any remaining proceeds will be distributed equally to shareholders and unitholders.
The Saputo company, which fought off challenges from MG and Bega Cheese to buy WCB four years ago, has grown to be one of the world’s top 10 dairy processors with other operations in Canada, the US, South America.
The MG takeover will be the biggest single acquisition made by the $16b company, which processes 8 billion litres of milk a year for markets in 40 countries.
North Queensland Independent MP Bob Katter has been quick to blast the Canadian buy-up.
“The announcement that Murray Goulburn, the biggest milk processor in Australia will be sold to a foreign corporation now means that almost all of beef and dairy processing, is owned by foreign corporations, almost all fruit and vegetables processing, and almost all sugar processing is owned by foreign corporations,” he said.
“In other words, all of the industries are now controlled by foreign corporations, with the exception of grains (the non-processing grains industry).
“What country would allow foreign corporations to own almost all its food processing?
“Under free trade agreements we cannot regulate, and with Mr Turnbull’s Trans Pacific Partnerships (TPP) we will never be able to apply any regulations to them now or in the future.”
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