Lion Dairy & Drinks offloads specialty cheese business for $280 million
Lion CEO Stuart Irvine has confirmed on Friday that its parent company Kirin has offloaded its specialty cheese business to dairy giant Saputo Dairy Australia for A$280 million. The deal is expected to finalised by the second half of 2019.
The decision is due to the impact of extreme weather on the production cost and availability of milk. The drinks business said this led them to a non-cash write down of A$530 million, but it doesn’t impact other brands it carries – including milk, yoghurt and premium juice.
“When we announced the decision to progress a sale of the Dairy & Drinks business last year, we made clear our intention to identify the best future ownership arrangements [for the division], and to ensure both Dairy & Drinks and the Lion business are ideally positioned for growth – with the right people, assets and investment behind their respective strategies,” said Irvine.
“As we worked through the sale process over the last several months, significant bidder interest emerged in both the whole Dairy & Drinks business and also in the specialty cheese assets on a standalone basis. After a careful assessment of all options, Lion has entered into an agreement to sell the Dairy & Drinks Specialty Cheese business to Saputo.”
The latest move of the dairy giant to Saputo will include selling King Island Dairy, Tasmanian Heritage, South Cape, Mersey Valley, Heidi Farm and Australian Gold. The deal also includes the cheese factories at Burnie (The Heritage) and King Island (King Island Dairy and Cheese Store) and two farms at the King Island (Horizon Glen and Kyeema).
“We are continuing to consider various pathways forward for the balance of the Dairy & Drinks business and will take the time to ensure we achieve the best possible outcome over the coming period,” Irvine concluded.
Lion and Kirin are awaiting approvals from the consumer watchdog ACCC and Foreign Investment Review Board. The latest deal sees Deutsche Bank as financial adviser; King & Wood Mallesons as legal adviser and Greenhill & Co Australia as independent financial adviser.