ACCC could force Saputo sell-off

A second sales process involving Murray Goulburn could soon swing into action, with some betting that the Australian Competition & Consumer Commission will urge the company’s new Canadian owners to sell one of its milk-processing centres worth hundreds of millions of dollars.

The expectation is that the company’s new Canadian owner, Saputo, will put the Koroit dairy processing centre up for sale.

Last year, Murray Goulburn said it was outlaying $260 million to make infant formula at Koroit in Victoria after reaching supply agreements with Mead Johnson Nutrition and Kalbe Nutritionals from Indonesia.

The deal — overseen by the group’s former managing director Gary Helou — would enable Murray Goulburn to capitalise on Indonesia’s large infant population with the distribution of its Devondale Natra Start infant formula product.

Initially, the company was installing a 45,000-tonne-per-annum dryer that would be increased to 90,000 tonnes as the demand increased, Murray Goulburn said at the time.

Saputo agreed to buy Murray Goulburn last month for $1.3bn after what was previously the country’s largest milk processor came under pressure to put itself up for sale.

Deutsche was hired to sell the company while Moelis advised Saputo. The deal still requires ACCC and Foreign Investment Review Board approval.

One of the expectations is that the ACCC will take exception to Saputo controlling the Koroit milk-processing centre and the Warrnambool facility, given the proximity and concentration in the market.

Sources say they expect the Koroit facility to be the one that the Canadian dairy giant opts to divest.

Potential bidders are likely include Bega — an underbidder in the contest to buy Murray Goulburn — Paramalat or Goodman Fielder, while rival Fonterra is unlikely to be interested.

Saputo entered the Australian dairy market in a major way when it swooped on the listed company Warrnambool Cheese & Butter in 2014, paying more than $500m after a prolonged takeover battle with Murray Goulburn.

Many believe that FIRB will wave through the sale to Saputo, although some remain sceptical, arguing that the government might not support Saputo now that Canada has pulled out of the TPP.

Meanwhile, Aurizon, Macquarie and Brookfield’s bid for the Wiggins Island Coal Terminal has some interesting connections.

Macquarie and Brookfield jointly own the West Australian oil and gas producer Quadrant Energy, of which Macquarie global resources group chairman Robert Dunlop is a director, while Mr Dunlop’s wife, Kate Vidgen, is on the board of Aurizon.

Time will tell if the bid is successful.