Saputo says decision on Koroit plant imminent

Lino Saputo Junior.

Lino Saputo Junior.

The new owner of Murray Goulburn’s Koroit plant is likely to be announced in the “next month or two” and could take control by the end of the year, Lino Saputo Junior says.

The Saputo chief executive said its enforced divestment of the plant would not be “a fire sale”. 

There were a lot of players in the world dairy industry who knew Saputo had to sell the plant and expressed interest in bidding for it. 

Interest had come from Australia, New Zealand, China and Europe and the list of suitors had since been culled down to “a handful” who included both Australian and overseas companies, Mr Saputo said.

“It is now in the second round and we are down to firming up the price,” he said.

There has been speculation that Bega Cheese is the frontrunner, but both Saputo and Bega Cheese have declined to comment.

Mr Saputo is still smarting over having to sell the plant, saying he completely agreed with some farmers’ comments that there would still be healthy competition for milk in western Victoria from other processors even if Saputo owned both the Koroit plant and Warrnambool Cheese and Butter (WCB).

The sale was recommended by the Australian Competition and Consumer Commission (ACCC) that was concerned Saputo would have too much control over the regional milk market if it owned both plants. 

The ACCC will have to approve the new owner, Mr Saputo said.

The criteria for the new owner was that it be a dairy company already operating in domestic and international markets, he said.

As part of the sale, Saputo has agreed the plant will come with 300 million litres of milk from suppliers to ensure the plant’s viability.

But that’s less than a third of the plant’s one billion litre capacity, with the factory hard hit by the exodus of suppliers after MG slashed its milk price in 2016.

On the perfomance of Saputo’s major south-west asset, WCB, Mr Saputo said while its profits reflected the volatility of international dairy markets, it was “performing well”.

Since Saputo took over WCB in 2014, it has increased the plant’s milk volume from 850 million litres to 1.1 billion litres. With the 1.6 billion litres it will have from MG’s seven other plants after it sells Koroit, Saputo will have about 2.7 billion litres, making it Australia’s largest milk processor.

Mr Saputo also said his company still aimed to sell off the Murray Goulburn Trading chain that includes stores at Koroit, Heywood, Simpson and Colac and a fertiliser depot at Timboon.

The stores were “not part of our scope,” Mr Saputo said.

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