Dairy farmers have backed a bid by Tanarra Capital for the Lion dairy and drinks business, saying they supported the asset manager’s expansion plans in Australia and international markets while lauding its local heritage.
Tanarra, ASX-listed food company Bega Cheese and Canadian dairy giant Saputo all entered the latest race for Lion’s dairy and drinks business after a $600 million deal that would have seen China Mengniu Dairy buy the division was rejected mid-year by federal Treasurer Josh Frydenberg on national interest grounds.
In a recent letter to Tanarra, Mark Kebbell, executive officer of the Dairy Farmers Milk Co-operative (DFMC), said the co-operative had a very long association with Lion’s dairy and drinks business and was very supportive of Tanarra’s bid.
“The consortium has expansion plans for the milk-based beverages both in domestic and international markets. Our farmers, and the industry generally, needs confidence built on demonstrated investment and commitment,” he said.
He said no competition issues would arise from a successful Tanarra bid, especially in regard to milk prices paid to farmers. But he said the co-operative had ongoing concerns about the prospect of further consolidation in the Australian dairy industry, which is something that would occur if an existing dairy player such as Bega or Saputo won the battle for the Lion dairy business.
The Lion business includes long established, big-selling brands such as Dairy Farmers, Big M, Pura, Daily Juice and Berri. Lion is owned by the giant Japanese brewer and food company Kirin.
The Dairy Farmers Milk Co-operative is a farmer-owned and farmer operated co-operative that supplies milk to Lion, with Mr Kebbell describing the co-operative as a “key partner” of Lion dairy and drinks.
The co-operative has over 300 members from more than 250 dairy farms in NSW, Victoria, Queensland and South Australia. Each year it supplies more than 230 million litres of milk to Lion.
The Australian Financial Review reported on Friday that Saputo had been knocked out of the race for the Lion business, and that Bega was ahead in the auction race.
In August Bega chairman Barry Irvin told The Age and The Sydney Morning Herald that Bega could be interested in buying the Lion division.
“Of course we’re interested in dairy consolidation and we’re interested in good dairy companies,” he said.
Source: Thanks smh.com