Cheese deal keeps Coon half Australian

Submitted 5/01/2009

AAP

Warrnambool Cheese and Butter Factory Company Holdings Ltd and National Foods Ltd will team up to operate the cheese business of former NSW co-operative, Dairy Farmers.

Their joint venture business, Australian Cheese Company Pty Ltd, will own and sell well-known cheese brands such as Coon and Cracker Barrel.

In November, Dairy Farmers shareholders voted overwhelmingly in favour of a $910 million takeover bid by Japanese-owned National Foods.

WCB, based in Allansford, Victoria, will pay National Foods $105 million for a half share of the joint venture and will manage the cheese manufacturing, cutting and wrapping operations of Australian Cheese.

National Foods, owned by Japanese brewing giant Kirin, will provide sales, marketing and distribution and also supply milk to Australian cheese.

National Foods owns the Pura Milk and Berri juice brands.

WCB says it will employ the manufacturing workers from Dairy Farmers while National Foods will employ those who were in sales and marketing.

"(The venture) will greatly increase the scale and diversity of our business, providing more stable retail earnings to complement our existing, largely bulk commodity business," WCB chief executive Neil Kearney said in a statement.

Earlier this month, WCB reported that its 2009 earnings were likely to decline from the record levels of 2008 due to falling world dairy prices.

The joint venture deal is expected to be completed in the first quarter of 2009 and WCB's $105 million payment will be funded through debt and equity.