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Biggest Australian dairy processors could merge

Competition chiefs are watching closely after Fonterra confirmed a bid for Murray Goulburn

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Dairy giant Fonterra has confirmed it has bid to buy troubled Australian co-operative Murray Goulburn.

 

Murray Goulburn, a farmer co-operative, has faced a major loss of suppliers in recent months, with many of these thought to have defected to Fonterra Australia, which has grown the amount of milk it collects by 25 per cent this year to about two billion litres.

 

Murray Goulburn reported a AUS$370.8 million (£217.21m) after-tax loss for 2016/17 last month.

 

New Zealand-based Fonterra has become Australia’s biggest processor and, if the bid was successful, the combined company would probably collect 40-50 per cent of Australian milk, which could raise regulatory concerns.

 

Fonterra Australia managing director Rene Dedoncker confirmed it had submitted an ‘indicative non-binding proposal’ to ABC Rural.

 

Last week, the co-operative announced it had received a number of confidential, non-binding indicative proposals, ranging from the sale of certain assets to the whole of the company, and said it was engaging with a number of parties to assess their proposals.

 

Rumours

 

Other parties rumoured to be interested include A2, Chinese company Yili and Lactalis-owned Parmalot.

Arla has denied its interest in acquiring Murray Goulburn following rumours of a bid.

 

Director of external communication in Arla Group Theis Brogger said media reports were ‘unfounded’.

He said: “We dismiss the story as rumour.”

 

Murray Goulburn hit the headlines in May this year, after it was taken to court by the country’s competition watchdog following retrospective milk price cuts.

 

The Australian Competition and Consumer Commission confirmed it was watching the situation with the agriculture commissioner Mick Keogh telling ABC a merger between Fonterra and Murray Goulburn would have a ‘likely effect on competition’.

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