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‘Business as usual’ for dairy company

Posted on February 3, 2010, 3:03pm and updated on February 4, 2010 at 7:51 am

Dairy giant Murray Goulburn will attempt to gain a stranglehold of the milk production from the South East, following an aggressive takeover bid of its rival dairy processing company.

Murray Goulburn Co-operative has informed its shareholders that it has made a proposal to acquire all shares in the Warrnambool Cheese and Butter Factory (WCB), which has dairy suppliers across the Mount Gambier region and a holding facility and small boutique cheese factory at Mil Lel.

But the board of the Warrnambool-based company has rejected the bid.

Murray Goulburn chairman Grant Davies said the cooperative was now considering its next steps and would keep supplier-shareholders informed.

He said the board believed the proposed merger was good for Murray Goulburn and was also an excellent opportunity for WCB suppliers.

“These benefits are a unique proposition for WCB that no other potential buyer can offer,” Mr Davies said.

“At this stage our proposal has not been recommended by the WCB board. However, we believe it is a very attractive proposal for the shareholders and suppliers of WCB.”

He said Murray Goulburn had maintained a strong balance sheet despite the global financial crisis and following a recent review of its banking arrangements had in place the financial capacity to fund such an expansion.

Mr Davies said under the proposal Murray Goulburn was committed to maintaining WCB core operations, including those in the South East.

“We propose to maintain WCB’s name, brands and strong links to the local community,” he said.

He said the merged company would be well positioned to support strong farmgate milk prices for the long term and reduce volatility to its supplier-shareholders.

Murray Goulburn has 600 milk suppliers in Western Victoria, Central Victoria and the South East of South Australia and employs more than 2000 people in regional Australia.

Its flagship brand is Devondale and the cooperative exports to more than 100 countries.

WCB managing director John McLean yesterday dismissed Murray Goulburn’s offer as being “way off the mark” and described it as being of no interest to the company.

“It is not the best offer we have had,” said Mr McLean, who explained a number of companies would like to take over control of WCB.

Mr McLean said the company was getting on with its business and had turned its fortunes around over the past six months.

“We are now well and truly back on track after last year’s well documented problems,” Mr McLean said.

He said the company would set a positive first-half financial result and would announce further step-ups for its suppliers.

“It is business as usual,” Mr McLean said.

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