Australia’s competition regulator has approved the CAD1.29bn ($1.01bn) acquisition of Murray Goulburn Co-Operative (MG) by Canadian dairy producer Saputo.
The Australian Competition & Consumer Commission (ACCC) said that it will not oppose the transaction after agreeing to a court-enforceable undertaking from the Canadian company to sell Murray Goulburn’s Koroit plant.
Last month, an approval from the ACCC became doubtful after it had expressed concerns that the acquisition would result in lower prices offered by the enlarged company to dairy farmers in western Victoria.
The regulator was in particular bothered about the Koroit dairy plant in the region, which along with the Allansford plant of Saputo would possess over 66% of the raw milk processing capacity in the south-west Victoria/south-east South Australia area.
Saputo has addressed the concerns by agreeing to sell the Koroit plant inside a specified period to a buyer, which would require an approval from the ACCC.
ACCC chairman Rod Sims said: “The undertaking creates an opportunity for a viable competing milk processor to enter or expand in the local region. When approving a new owner of Koroit, we will focus on its ability to be a strong and effective competitor for raw milk in the region.”
“The ACCC has carefully considered responses from a broad range of market participants about Saputo’s undertaking and the broader transaction.”
According to the competition body, the commitment from Saputo also includes details of transitional milk supply arrangements and independent management for the Koroit dairy plant until it is divested.
Murray Goulburn confirmed that the sale of the Koroit plant to a third party buyer will not affect the terms of the sale of its operating assets and operating liabilities to Saputo. These include the total amount to be paid by Saputo to Murray Goulburn shareholders.
The acquisition will still be subject to other conditions like approvals from Murray Goulburn’s voting shareholders and the Foreign Investment Review Board (FIRB).
After satisfying all the preceding conditions precedent, the acquisition is expected to be completed on 1 May 2018, said Murray Goulburn.
