Coles purchase of Saputo assets confirmed. Will Woolworths follow?

While Coles have wrapped up their acquisition of Saputo processing sites, Woolworths said they will not yet follow their rival into the dairy trade.

Woolworths says it “has no plans at present” to follow Coles into the dairy trade after its rival wrapped up its acquisition of Saputo processing sites.

Last month, Saputo finalised the sale of its processing plants in Sydney and Melbourne to Coles in a $105 million deal that was opposed by most farmer lobby groups.

However, Australian Competition and Consumer Commission deputy chairman Mick Keogh said the Coles purchase was unlikely to create a “substantial lessening of competition”.

“We explored the industry’s concerns very closely through discussions with farmers and their representative bodies, and conducted a detailed review of Saputo and Coles’ internal documents and their incentives,” he said.

Fonterra is in the process of finding a buyer for its Australian operations with its Oceania boss Rene Dedoncker telling The Weekly Times the factory network would be sold in its totality.

“So there are six consumer businesses in total around the world, of which Oceania is one.

“Now, the actual execution, it could be full or partial divestment – not of the individual businesses, we do not see Australia being split up.”

A Woolworths spokeswoman said: “We do not have any plans at present to purchase any of Fonterra’s infrastructure.”

Australian Dairy Farmers president Ben Bennett led the charge against the Saputo-to-Coles sale last year.

He said this week that the ACCC decision had opened the door to Woolworths to follow suit.

“But whether they would want to in the current pricing environment is another question,” Mr Bennett said.

“Woolworths have a very good deal at the moment – and I say that tongue firmly in cheek.”

The ex-Saputo sites now owned by Coles employ about 48 workers and are located in Laverton in Melbourne’s inner west and Erskine Park, near Penrith in Sydney’s western suburbs.

Each plant has the capacity to process 225 million litres a year. Both were already used to manufacture Coles’ two and three-litre own brands before the supermarket acquired the processing facilities.

Last week, Rabobank dairy analyst Michael Harvey said details on how Fonterra would sell its Australian assets remained “a little bit grey and hard to work out”.

“It’s going to be complex and the ACCC will be looking at competition at the farm gate and downstream trade,” Mr Harvey said. “To me it’s about primary processing, which they will assess at the regional level.”