November 26, 2020

Bega Cheese – the owners of the Peanut Company of Australia – has agreed to buy Lion’s dairy and drinks business for $534 million.

The acquisition is expected to be completed by the end of January.

Lion Dairy & Drinks manufactures, markets, distributes and sells some of Australia’s best-known dairy brands including Dairy Farmers, Big M, Yoplait and Pura.

Its core business is milk-based beverages, yoghurt, chilled juices, cream and custard, and white milk.

In a statement to the ASX on Thursday, the BGA Board said it was significant that Lion Dairy also owns Australia’s largest national cold chain distribution network supplying food service and convenience stores.

Lion Dairy also has a joint venture with Vitasoy Australia Products Pty Ltd which manufactures and sell plant-based products under the Vitasoy brand.

The company already had a relationship with Bega through Capitol Chilled Foods (Australia), which manufactures and sells dairy products in the ACT.

Bega said the purchase would be funded by a combination of new and extended debt facilities and the proceeds from a $401 million share offer.

The ASX statement said the combined business was expected to generate revenue in excess of $3 billion.

Bega says the acquisition would significantly expand its domestic distribution network.

“We are very pleased with the performance of acquisitions made in recent years which are achieving or exceeding our profit targets,” Bega Cheese CEO Paul van Heerwaarden said.

Late last year Lion – which is owned by the Japanese brewer Kirin – tried to sell its Dairy & Drinks business to China Mengniu Dairy for $600 million.

The Foreign Investment Review Board approved the sale but the deal collapsed after Treasurer Josh Frydenberg said the investment would be “contrary to the national interest”.

Lion maintains a large portfolio of beer brands in Australia, including XXXX, Tooheys and West End.


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