The Specialty Cheese Business is conducted at two manufacturing facilities located in Burnie and King Island, Tasmania, Australia, and employs approximately 400 people.
The purchase price of A$280m (US$197m), on a cash-free and debt-free basis, will be paid in cash at closing from cash on hand and available credit facilities.
The sale to Saputo will include all of Dairy & Drinks’ specialty cheese brands, including King Island Dairy, Tasmanian Heritage, South Cape, Mersey Valley, Heidi Farm and Australian Gold, as well as cheese manufacturing assets at Burnie (The Heritage) and King Island (King Island Dairy and Cheese Store), and the two Lion-owned farms on King Island (Horizon Glen and Kyeema).
The Specialty Cheese Business will enable Saputo’s Dairy Division (Australia) to further diversify its product offering, adding to and complementing its current activities.
Lion CEO Stuart Irvine said, “When we announced the decision to progress a sale of the Dairy & Drinks business last year, we made clear our intention to identify the best future ownership arrangements for the Dairy & Drinks business, and to ensure both Dairy & Drinks and the Lion business are ideally positioned for growth – with the right people, assets and investment behind their respective strategies.”
After a careful assessment of all options, Irvine said, Lion entered into an agreement with Saputo.
“Saputo is ideally positioned to drive the business forward, given its deep dairy capabilities, complementary portfolio and commitment to the cheese category domestically.
“We are continuing to consider various pathways forward for the balance of the Dairy & Drinks business and will take the time to ensure we achieve the best possible outcome over the coming period,” Irvine concluded.
Lion’s alcohol businesses in Australia and New Zealand, and its Global Markets business unit, are not affected by the Dairy & Drinks sale process.
The transaction is subject to foreign investment approval and clearance by the Australian Competition and Consumer Commission, and is expected to close in the second half of calendar year 2019.