Talleys Group-owned Open Country Dairy (OCD) says it is buying Taupo-based Maori-owned Miraka Dairy.
The deal is for 100% of the company.
This deal comes hard on the heals of Open Country Dairy buying Mataura Valley Milk from A2 Milk two weeks ago.
Open Country CEO Mark de Lautour said the opportunity to purchase Miraka happened quickly and made sense for the business.
Open Country currently operates four dairy ingredient manufacturing sites around New Zealand, located in Horotiu, Waharoa, Whanganui and Awarua. It will soon add a fifth site, Mataura Valley Milk near Gore, once its conditional acquisition agreement with current shareholders is finalised.
But the mid-North Island Miraka purchase will allow OCD to improve its milk collection processes, allowing it to "realise some important efficiencies."
Talleys Group is building a large-scale dairy business with these acquisitions and will be an increasing challenger to Fonterra.
Yili, the giant Chinese food company, owns Oceania Dairy, and Westland Milk, and is probably the second largest after Fonterra. But with the Miraka purchase, Talleys will be close to claiming that position.
13 Comments
Should be good for Miraka suppliers.
Maybe. I'm not sure that supplying Talley's was part of the kaupapa.
What the heck just happened there.
Be interesting to see how the local suppliers here feel about that, many have only just shifted there.
Supplies should be relieved that payment for there milk is now secure
Was it not ?
As reported in NBR
Sale or liquidation
In a letter to owners, seen by NBR, Tuaropaki Trust chair Gina Rangi said Miraka's position had become untenable. The company had not reported a profit or paid a dividend for several years, and carried $36 million in debt to BNZ.
Last month, Miraka asked shareholders for an urgent loan to continue operations. Trustees declined, noting they had already provided financial support in the past and further funding would not safeguard the interests of owners.
"This left only two options: sell Miraka to a willing buyer or the BNZ would appoint a liquidator," Rangi said. "Despite difficult circumstances and very tight timelines, we are grateful that a sale was achieved, avoiding the appointment of a liquidator. This is by far the best outcome."
She said while the sale was disappointing, it protected jobs, ensured suppliers were paid, and kept the Mökai plant operating.
Thanks for that.
I didn't know the situation and I'm damn sure the new local suppliers didn't either. Very disappointing on a number of levels.
Talleys would surely be the biggest private business operation in NZ
Open Country Dairy, Seafoods including mussels, Frozen Foods including icecream, AFFCO meat plus farming operations
Miraka Chair "However, there are significant challenges that come with being a standalone regional processor operating in a global market."
https://www.miraka.co.nz/post/media-statement-miraka-announces-sale-to-…
Vietnam Dairy Products Joint Stock Company own 13.55%.
An interesting, bold, development. And, I expect, a risk for Talleys.
Fonterra divesting its consumer brands allows it to focus on excellence in ingredients production. Arguably with the capital payout to farmer shareholders, the capital structure, from paddock to end product will carry less debt, and consequently lower interest payment liabilities (essentially dead weight) that should strengthen bottom line profitability all round, particularly for the thousands of individual farm businesses that make up the Fonterra supplier/shareholder supply base.
Arguably this will strengthen Fonterra as the milk solid value benchmark maker, against which other non-cooperative processors will have to compete with for sustainable milk supply.
With no direct farm production subsidies in NZ, the next 5 or so years will likely demonstrate the superiority of the farmer/supplier owned cooperative as the superior model to deliver best return to the farming businesses and the regional economies in which they are located. And prove superior in retaining earnings from farm product within the NZ economy (rather than distributing profit to offshore interests).
Highly unlikely that the Fonterra model will be superior. They will become a simple commodity supplier at the mercy of much larger global entities that will squeeze them dry. Shareholders should cash up and run as soon as the transaction is complete... it will be all downhill from there
By that, you infer retaining the consumer brands portfolio would avoid your predicted collapse? If it is, then it's drawing a long bow.
If Fonterra was just selling raw milk (like coal, or cereals) then I would agree. But it's selling value added product extracted from the whole milk. Important ingredients in global food production.
It would be enlightening to see analysis of dairy farm profitability between the major dairy producing countries with state subsidies removed from the income side. My intuition thinks NZ dairy farmers would come out on top by a country mile.
But there again the whole rationale of production in those other countries is entirely different from NZ. NZ essentially sells its export surplus in the NZ domestic market. Other countries export their domestic market surplus. NZ primary sector is export driven - dairy, fruit, wine, seafood, meat, fibre, forestry.....all export focused, the domestic market is a very small percentage of total production.
I think you miss the point, Fonterras is value added. It runs a business to business value and as opposed to a business to consumer value add. Time will tell which direction up or down.
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