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New owners for Leongatha MG factory

SOUTH Gippsland farmers have helped pave the way for Canadian company Saputo’s $1.31 billion takeover of Australia’s largest dairy cooperative Murray Goulburn (MG) that includes MG’s Leongatha milk factory.
It seems there is a bright spark on the horizon for many local MG farmers with shareholders overwhelmingly voting for the sale of the cooperative at last Thursday’s extraordinary general meeting.
With nearly 98 percent of shareholder votes in favour of the proposed sale, the deal now rests on approval from the Foreign Investment Review Board.
If approved, MG expects the sale to complete on May 1.
The Australian Competition and Consumer Commission (ACCC) last Wednesday confirmed it would not oppose the proposed sale, with the condition Saputo must divest the Koroit dairy plant.
Burra Foods CEO Grant Crothers told The Star the company could consider buying the Koroit plant.
“We see the Koroit factory as being a high quality plant and when the disposal process commences we will consider its suitability for our long term plans,” he said.
MG supplier Peter Young of Buffalo did not attend the meeting, but voted in favour of the sale.
“It was our only option. We had gone well past the point of no return,” he said.
“If it wasn’t sold to Saputo, someone is going to buy it in a fire sale and we won’t get anything out of it. At least if we agree to Saputo we know what we are dealing with.”
Mr Young said while he was disappointed the cooperative structure would be lost under the sale, he was positive about Saputo’s influence over the company.
“I think (Saputo chief executive) Lino Saputo Jnr has a cooperative mindset and is very pro helping farmers as much as possible,” he said.
“I can’t see him saying one thing and then doing another. I think if Saputo wasn’t doing the right thing, it would be well said by now.
“I know there are former MG suppliers who are talking about coming back once the deal goes through. We have lost control of our post farmgate industry…but I don’t see it as the end of the industry.”
Mr Young said while he thought the forced divestment of the Koroit plant was “a bit silly”, it could be positive for both the Leongatha and Maffra factories.
He said the interference by the ACCC “was a waste of time and put more stress on everybody to be honest”.
“Koroit was the most advanced out of the factories. Its sale could possibly help Leongatha as it might encourage investment and it might keep Maffra going for a little bit longer as well,” he said.
At last Thursday’s meeting, MG chief executive officer Ari Mervis said Saputo was a credible processor in Australia, which gave the cooperative confidence Saputo would honour its commitments to suppliers.
“Saputo recognises that in order to run efficient production facilities they need profitable dairy farms and a profitable industry, supported by strong milk prices,” he said.
Mr Saputo Jnr said he remained confident in Saputo’s offer and expected to be able to finalise the transaction by May 1.
“Our goal remains to continue to invest in Australia with a long term perspective and ensure we have a strong and sustainable dairy industry,” he said.
After the sale, ongoing MG directors Lisa Dwyer, Ian Goodin, David Grant, Brock Williams and chairman John Spark will stay on until the retained litigation is complete.
“On completion we will farewell Bill Bodman, Kelvin Jackson, Mark Clark, Craig Dwyer and Harper Kilpatrick as directors,” Mr Spark said.
After conclusion of the retained litigation, MG will likely be wound up and liquidated.
“Any proceeds will then be distributed equally to shareholders and unitholders,” Mr Spark said.
Gippsland South MLA Danny O’Brien said dairy farmers in his electorate would be relieved to know the future of MG has been finalised and they can now move forward under the ownership of Saputo.
“The last couple of years have been an extremely trying time for industry. It is disappointing that the last major farmer’s co-op is no more, but there was really no alternative,” he said.
“I hope for the sake of the many farmers in my electorate and the businesses and jobs that rely on them as primary producers, they will now be able to get on with life and hopefully look forward to a bright future.”
Not all are happy with the sale of MG to a foreign owner including Queensland MP Bob Katter who will try to block the sale in federal parliament and there is still a legal class action cloud hanging over the dairy giant.
While the Slater and Gordon Law firm is reported to be launching a class action case on behalf of disenchanted MG shareholders to be backed by litigation funder IMF Bentham Limited, MG and MGRE have noted that no such action has been commenced.
Slater and Gordon is actively seeking out investors who lost money on MG’s listed shares for the class action against the dairy co-operative and its subsidiary, MG Responsible Entity Limited and registrations for unit holders wanting to join the class action are open until May 18 and formal proceedings would be filed soon after, subject to sufficient interest.

Short URL: http://thestar.com.au/?p=24621

Posted by on Apr 10 2018. Filed under Featured, News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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