Victoria’s Burra Foods has bought the Gippsland assets of United Dairy Power and assured local dairy farmers of their continuing milk supply contracts.
In turn, Australia’s largest dairy company, Murray Goulburn, has acquired UDP’s leading cheese brand, Caboolture Cheese, as well as some of its processing equipment.
The sale of UDP’s assets follow the appointment of receivers to UDP’s parent company, Five Star United Foods, late last year after its bankers, Rabobank, lost confidence in the company and its Hong Kong owners, and removed its board.
Five Star United Foods, owned by Hong Kong businessmen William Hui and Johnny Chan, had bought UDP from its founder Tony Esposito for $70 million nine months earlier, with plans to expand into the milk powder export business.
The receivership was unusual in that its cheese and butter processing company, UDP, and its subsidiaries continued to trade while receivers tried to stabilise the business.
The chief executive of Korumburra-based Burra Foods, Grant Crothers, said that the acquisition of UDP’s local milk depot in Poowong in Victoria was a key part of the acquisition and an important piece of infrastructure to support the collection of milk from across Gippsland.
“This is as an important growth step in the company’s 25-year history and will enhance Burra Food’s long-term future and its ability to meet the continued demand for high-quality dairy ingredients from its primarily Asian customer base,” Mr Crothers said.
“Up until now, we have built the business through organic growth, so acquisition is new for us but the Poowong depot is a natural fit and we hold the farmers who supply UDP in high regard.”
Mr Crothers said the expansion would strengthen Burra Food’s market position by providing greater assurance for a secure and stable milk supply, which it uses to make natural cheeses, fresh milk concentrates, specialty milk powders and fresh dairy products.
UDP collects 200 million litres of milk, equal to 4 per cent of Australia’s annual production, from farmers in SA and Victoria, which its uses to produce cheddar cheese, butter, whey and mozzarella cheese under its well-known Caboolture brand.
Murray Goulburn’s chief executive Gary Helou said UDP’s Caboolture was a food service market-leading shredded mozzarella brand, mainly used in pizza restaurants.
“The strategic integration of the Caboolture brand into our growing food-service business will strengthen MG’s position in this segment,” Mr Helou said in a statement to its farmer-shareholders.
“The acquisition of the Caboolture brand forms part of our strategy to diversify our portfolio to higher-value dairy foods, with the goal of providing sustainably higher farmgate prices to MG suppliers.”
The move comes ahead of Murray Goulburn’s planned $500m capital-raising in July, which will see a unit trust listed on the Australian Securities Exchange.
Part of the proceeds of the raising are slated for an expansion of Murray Goulburn’s cheese processing facilities.
Advisory firm PPB was appointed receivers and managers of Five Star United Food (Aust) and has handled the sale of its assets.
Source: The Australian