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Dairy & Ruminant


March 15, 2018


Murray Goulburn to allocate $235 million for additional costs after sales to Saputo
 

 

Australia's dairy cooperative, Murray Goulburn, said that it will set aside $235 million following the upcoming sales of its assets to the Australian subsidiary of Canadian dairy company, Saputo, The Sydney Morning Herald reported.


The amount will help cope with potential costs from a class action lawsuit, operating costs and costs associated with winding up the processor.


Out of the $235 million figure, $195 million will be allocated for "retained litigation" - a reference to the lawsuit against Murray Goulburn, proceedings launched by the Australian Competition and Consumer Commission (ACCC) and an Australian Securities and Investments Commission investigation, the cooperative's "Explanatory Memorandum" stated.
 

The cooperative further claimed that the $195 million amount does not indicate "actual liability in respect of the Retained Litigation or that any such liability is reflected by the total retention amount."


In the 132-page memorandum sent to shareholders, it is also disclosed that Saputo led the race to take over Murray Goulburn's assets as it competed with 29 other entities outside Australia; more than half of those organisations actually signed confidentiality agreements to participate in the sales process.


The timetable for the proposed sales process had been reconfirmed by the cooperative, but the process requires the support of the ACCC, the Foreign Investment Review Board and its farmer suppliers.


Murray Goulburn expects the deal with Saputo to be completed by May 1 - less than a month after its shareholders would vote on the deal in Melbourne. A support of 50% plus one of the dairy farmers currently supplying the cooperative with milk will allow the deal to proceed.
 

According to Murray Goulburn, the sales of its operation to Saputo would provide an initial payment of 80 cents per share to farmers and unit holders. It had outlined a timetable showing that farmers will be paid promptly should they support the deal and after it is completed.


"Saputo Australia's proposal was the highest value proposal received for a whole of business acquisition which could be signed in an acceptable timeframe, and was superior to all other available internal and external options," said Murray Goulburn chairman John Spark in a letter to shareholders.

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