Warrnambool and National Foods agree joint venture

The new company will be owned 50/50 by National Foods and Warrnambool. It will own and operate the retail cheese assets of Dairy Farmers that were acquired by National Foods in November 2008. Warrnambool will contribute A$105m for its share in ACC.

WCB CEO and MD, Neil Kearney, welcomed the move: “Agreement of the cheese joint venture with National Foods marks an exciting step in the development of WCB. The joint venture provides WCB with ownership in some of Australia’s premier cheese brands. It will greatly increase the scale and diversity of our business, providing more stable retail earnings to complement our existing, largely bulk commodity business.”

National Foods MD, Ashley Waugh, added: “National Foods looks forward to working with Warrnambool Cheese and Butter. This joint venture brings together the complementary skills of both parties: brand management, sales and marketing skills from National Foods, and efficient cheese manufacture skills and capabilities from Warrnambool Cheese and Butter.”

ACC will own Dairy Farmers’ leading Australian cheese brands, including Coon, Cracker Barrel and Mil Lel. It will also operate the cheese manufacturing, cutting and wrapping facilities of Dairy Farmers at Allansford, Simpson and Jervois. Cheese manufactured at the Malanda milk factory will be supplied to ACC.

Completion is expected to occur in the first quarter of 2009. WCB’s contribution of A$105m will be funded with a combination of debt and equity. Completion remains subject to WCB finance.

Warrnambool is in advanced discussions with debt and equity providers, and is confident that an attractive funding package will be secured for ACC. WCB shareholders will be given the opportunity to participate in any equity raising.