Bega has acquired Betta Milk and Meander Valley Dairy from TasFoods for $11 million. The deal includes the brands, Betta Milk plant and equipment, and a perpetual, royalty free licence to use the Pyengana Dairy brand in Australia.
TasFoods will retain the land and buildings at Betta Milk’s Burnie site, leasing the site to Bega. It will also retain the lease attached to Meander Valley, subleasing the Launceston site to Bega.
TasFoods will use net proceeds from the sale to clear all existing term debt and fund future growth capital requirements.
TasFoods CEO Scott Hadley said the company would be debt free and well-capitalised to grow its poultry business, Nichols Poultry, and premium cheese producer, Pyengana Cheese.
“The sale represents an important strategic step towards simplifying TasFoods and strengthening the company’s balance sheet,” Hadley said.
The company started a strategic reset in 2022, which saw it offload Shima Wasabi in June this year.
“The transaction allows us to sharpen our focus on delivering organic growth across Nichols Poultry and Pyengana Cheese while continuing to identify and evaluate strategic and financially compelling opportunities in adjacent, high-growth food and beverage sectors to create sustainable value for our shareholders,” he said.
Bega said its Tasmanian dairy business has operated in the Lenah Valley since the early 1900s, and the acquisition improves Bega’s brand offering to Tasmanians.
Bega Group CEO Pete Findlay said the company recognised the quality in the Betta Milk, Meander Valley Dairy, and Pyengana.
“We are delighted to add these Tasmanian brands to our portfolio. Betta Milk is a fantastic regional brand that has been a household name in Tasmania for over 65 years. Acquiring these brands supports our ambitions to become a great Australian food company,” Findlay said.
1H CY23 results
Total operating revenue was $38.2 million, up 11.8 per cent on prior comparable period (pcp). This was largely driven by increased pricing. Poultry was up 17 per cent, and dairy by 5 per cent.
Operating EBITDA was a loss of $2.1 million, but a 51 per cent improvement pcp from $4.2 million loss.
Poultry had an eight per cent increase in gross margin due to successfully implemented efficiency measures.
Hadley said: “Revenue performance has been particularly pleasing in H1 2023 in light of the market challenges the business faced. We have observed consumers in the grocery channel preference affordable options over premium brands and to have delivered growth on the pcp along with grow margin expansion within that environment highlights the value of TasFoods’ brand porfolio.”
