Bega Cheese is reaffirming its position as one of the largest dairy producers in Australia, confirming on Thursday, 26 November, that it intends to buy Lion Dairy & Drinks for $534 million.
The acquisition will increase Bega Cheese’s annual milk intake from 955 million litres to 1.7 billion litres and expand the business into milk-based beverages, yoghurts, cream and custard.
Lion Dairy & Drinks produces Dare, Pura, Dairy Farmers, Farmers Union, Big M, Masters, Yoplait, Juice Brothers and Daily Juice products.
Bega Cheese will also acquire Lion’s national cold-chain distribution network – which is Australia’s largest – supplying food service and convenience stores.
The sale also includes Lion’s joint ventures with Vitasoy Australia Products (Vitasoy) and Capitol Chilled Foods Australia (CCFA) as well as its minority shareholding in Made by Cow.
Altogether, the business is expected to generate revenue in excess of $3 billion for Bega Cheese.
The company says it will fund the purchase through new and extended loans, and a $401 million underwritten entitlement offer.
Bega Cheese executive chairman Barry Irvin said the company is “delighted” to announce an acquisition that will “create significant value for shareholders”.
“The expanded product range, manufacturing and distribution infrastructure and brand portfolio realises our ambition of creating a truly great Australian food company,” he said.
Lion CEO Stuart Irvine said his business will now focus on its portfolio of alcoholic beverages, including XXXX, Furphy, James Squire and Little Creatures.
“The completion of this sale will enable further investment behind our priority categories of core beer, craft beer and seltzer in both domestic and international markets,” he said.
Lion also sold its specialty cheese business to Saputo Dairy Australia for $280 million in October 2019.
Completion of the acquisition is expected to take place at the end of January 2021.