Sharechat Logo

Australian's Bega buys rights to Vegemite, Kraft brands from Mondelez for A$460M

Thursday 19th January 2017

Text too small?

Australian-listed dairy company Bega Cheese will buy the bulk of Mondelez International's trans-Tasman grocery business, including the flagship Vegemite brand, for A$460 million. 

The deal will be fully funded by Bega's existing A$500 million banking facility and is expected to boost earnings by A$40-to-A$45 million and revenue by A$310 million in the first full year of operation, Bega said. The dairy group generated sales of A$1.2 billion in the year ended June 30, 2016, with earnings before interest, tax, depreciation and amortisation of A$65.4 million. 

The acquisition will give Bega the global trademark rights for Vegemite spread and ZoOSh salad dressings, a transitional royalty licence for several Kraft products including peanut butter and cheese until the end of the year, 6.3 hectares of land and buildings in Port Melbourne, and a licence for Dairylea and Snackabouts brands. The Philadelphia cream cheese brand wasn't included in the sale. 

The transaction is expected to be completed in the first half of 2017, and Bega said it will provide new cash flow and growing businesses that mirror its existing structure, and greater diversification to its existing dairy foods and nutritional businesses. 

"This acquisition will be value accretive in its own right, strategically important and company making," executive chairman Barry Irvin said in a statement. "These iconic brands alongside the Bega brand are strong building blocks to enable Bega Cheese to become a great consumer goods business." 

Australian dairy companies were caught off-guard by last year's slump in global dairy prices when there were was a supply glut, although Bega managed to ride through the downturn, lifting annual revenue and more than doubling profit. 

Mondelez's New Zealand operations include the Cadbury factory which was part of a global takeover in 2010. The local holding company posted a profit of $9.2 million in calendar 2015 on revenue $291.3 million, of which $68.3 million of sales were to Mondelez Australia and $19.4 million to Cadbury Enterprises. 

Bega's ASX-listed shares jumped 8.7 percent to A$4.87. 

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report