MG. Murray Goulburn Co-operative has entered into a binding agreement with Saputo Incorporated.
The Canadian based company will acquire the operating assets and liabilities of MG for an aggregate total of $1.3 billion.
The sale was announced at the MG annual general meeting held on Friday.
This follows a strategic review of the dairy giant earlier this year.
“This transaction provides certainty for the future of our suppliers and a far better outcome than anything we can achieve by remaining a standalone entity,” says John Spark, MG chairman.
“MG has reached a position where, as an independent company, its debt was simply too high given the significant milk loss.”
The transaction includes milk supply commitments for active MG suppliers totalling $114 million and enables a step up of 40 cents per kilogram of milk solids to $5.60 for the 2017-18 financial year, for milk supplied from November 1.
An additional loyalty payment of 40 cents per kilogram of milk solids will available to active suppliers.
The transaction is subject to approval by MG voting shareholders.
Saputo is among the leading dairy processors globally and recently acquired Warrnambool Cheese and Butter in Victoria.
Liberal Member for Braddon and Circular Head Regional Economic Development Working Group chair Joan Rylah cautiously welcomed the announcement.
“With regards to Edith Creek, MG have advised me that the sale of Edith Creek is continuing to progress and MG retains the right to sell the facility.
“Saputo have agreed to take over all milk supply, with a five year guarantee of pick-up, which provides certainty to Tasmanian farmers.”
This follows the news the co-operative is reshaping its inbound logistics in response to a reduction in milk supply and collection needs. It is expected that as many as 60 roles in the Victorian townships of Koroit, Leongatha, Maffra and Rochester will be affected.