Fonterra Lobs Murray Goulburn Bid
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Fonterra, the world’s biggest dairy cooperative and a major exporter, is looking to add Australia’s largest dairy processor the troubled Murray Goulburn to its already dominant position in trans-Tasman dairying.
Fonterra, which has been attracting dairy farmers away from Murray Goulburn, confirmed yesterday it was looking to buy Murray Goulburn after it released its annual results for fiscal 2017 on Monday (see separate story).
Murray Goulburn has sought bids as part of a strategic review after a disastrous couple of years where it was caught paying too much to farmers for their milk in the face of a deep global slump in dairy prices.
Murray Goulburn confirmed last week it had received a number of non binding bids and approaches.
It has already revealed losses of $371 million in losses as a result of the milk supply debacle and cuts to its farmgate price that almost crippled some of its suppliers.
The company is closing three plants in Victoria and Tasmania and getting rid of 360 people. It will also write off farmer debts incurred from advance payments based on the farmgate price debacle.
Media speculation has claimed that Chinese investors are eyeing Murray Goulburn.
“We have placed an indicative, non-binding proposal into the mix, with Murray Goulburn,” Fonterra Australia’s managing director René Dedoncker said yesterday.
"And we'll now leave that with the Murray Goulburn board and give them some space and respect just to review that, with other proposals that they've got.
"But there is potential in that space. But I guess what we're not doing is waiting for that, we're continuing down our own path of investment, and at the same time we'll see what happens on the other side."
Fonterra is the first buyer to come out, so to speak and identify itself to about two billion litres - boosted by farmers moving away from Murray Goulburn. Murray Goulburn had 2.7 billion litres in the year to June 30.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.