A $280 million agreement will see Lion's Dairy & Drinks (LDD) specialty cheese business sell to Saputo Dairy Australia (Saputo).
Lion's chief executive Stuart Irvine confirmed the sale saying Kirin and Lion reached the agreement to sell.
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).
"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," Mr Irvine said.
"As we worked through the sale process over the last several months, significant bidder interest emerged in both the whole Dairy & Drinks business and also in the specialty cheese assets on a standalone basis. After a careful assessment of all options, Lion has entered into an agreement to sell the Dairy & Drinks Specialty Cheese business to Saputo.
"Saputo is ideally positioned to drive the business forward, given its deep dairy capabilities, complementary portfolio and commitment to the cheese category domestically."
In April, Kirin and Lion assessed the fair value of the Dairy & Drinks business. The recent impact of extreme weather on the cost and availability of milk, combined with discussions with bidders to date in the sale process, have led Lion and its parent Kirin to take the step of recognising a non-cash write down of the carrying value of Dairy & Drinks, including the cheese business.
Lion said the non-cash write down of $530 million will not impact the future underlying performance of the Dairy & Drinks business.
"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," Mr Irvine said.
Lion Australia is part of the Lion Group, a wholly-owned subsidiary of Kirin Holdings. Kirin is a global, multi-industry food and beverages company headquartered in Tokyo.
Source: The Advocate - April 27