Bega Cheese has confirmed it has entered into a binding agreement to buy Kirin’s Lion Dairy & Drinks business for $534 million.
The deal, revealed on Monday by Inside FMCG, will be completed at the end of January and includes a raft of brands in the dairy aisle, including Dare, Farmers Union, Big M, Masters and Dairy Farmers milk-based drinks; Yoplait, Farmers Union and Dairy Farmers yoghurts; Juice Brothers and Daily Juice chilled juices; Pura and Dairy Farmers cream and custards; and white milk sold under the Pura, Dairy Farmers and Masters brands.
But it is not just the multitude of brands and categories that Bega wins from this deal – a jewel in the crown is gaining Australia’s largest national cold-chain distribution network supplying both foodservice and convenience stores, and 13 factories spread around the country.
Lion Dairy also has partnerships with the brands Yoplait (which it distributes in some Southeast Asian markets), Vitasoy soy milk, and Capitol Chilled Foods which manufactures dairy products in the ACT under the Canberra Milk label.
Bega Cheese’s executive chairman Barry Irvin said the board believes the acquisition will create significant value for shareholders. “[It] 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.”
Irvin said the combined Bega-Lion Dairy business will turn over in excess of $3 billion annually. The company hopes to achieve synergies within the distribution network, procurement and corporate reorganisation of around $41 million.
Bega will fund the deal via new and extended existing debt facilities and the proceeds of a $401 million share placement.
In a statement, vendor Lion said the sale was unconditional, with no further regulatory approvals required.
Footnote: The net acquisition price represents a gross sale price of $560 million less a $26 million deduction for IT separation costs (net of tax), according to Bega.