Saputo wants to sell MG Trading

By Stephen Cooke

SAPUTO WILL sell the MG Trading business if the right opportunity arises, having failed to convince Murray Goulburn to “carve them out of the deal” leading up to the sale of the co-operative.

Saputo CEO, Lino Saputo Jnr, told Dairy News Australia the Canadian company would be open to selling MG Trading if it thought a prospective buyer with retail experience “could do a better job for the community and employees of MG Trading”.

“If someone who is in retail business presents themselves as a strategic buyer of those assets I think that would serve MG Trading very, very well,” Mr Saputo said.

“We pride ourselves on being high quality, low cost processors of dairy. That’s what we do extremely well. We don’t have a lot of experience in retail stores.

“While going through the process with the Murray Goulburn, we had asked if MG Trading could be carved out of the deal, and they could sell it separately.

“Unfortunately there wasn’t enough time for them to take on a second process alongside this process (selling Murray Goulburn as a whole).

“So we made a commitment to the board that if there was an opportunity for them to carve out MG Trading before close of this transaction, that they’d have every right to sell it and allow those proceeds, whatever they are, to go to current shareholders of Murray Goulburn.

“If at the time of closing, MG Trading is still a part of Murray Goulburn, then we will take them on and find the right management for MG trading.”

Mr Saputo said the addition of MG’s processing facilities and milk supply would increase the amount of solids they could sell to customers in Asia, including Japan, Taiwan, Korea, the Philippines and China, and broadens the portfolio of products it can bring to market.

Their customers have already shown interest in creams, spreads and processed cheese that MG is producing, and it will enable Saputo to supply infant formula, albeit in a different format MG is currently producing.

Mr Saputo said he was “very impressed” with MG’s suite of products.

“Murray Goulburn still has the opportunity to come back to its former glory. The infrastructure and personnel are there, it’s just the strategy on how we go to market and at what price.”

Mr Saputo is confident the company can grow supply from 1.9b litres to 2.5b litres, saying former suppliers were closely watching from the sidelines.

“Murray Goulburn suppliers are very loyal but for economic reasons they had to leave. Now there is much more stability going forward.”

In other news, MG has admitted breaching its continuous disclosure obligations and will pay a fine of $650 000.

The fine will be paid from money set aside to cover ongoing legal action against the co-op.

MG will pay the fine under a deal with the Australian Securities and Investments Commission (ASIC) over its behaviour in the lead-up to last year’s profit downgrade and cut in milk prices paid to farmers.

ASIC brought Federal Court proceedings against Murray Goulburn, alleging that from March 22, 2016 to April 27, 2016, it had failed to notify the ASX that it was unlikely to achieve forecasts it made in February.

It is not alleged by ASIC that Murray Goulburn deliberately contravened its continuous disclosure obligations.

Murray Goulburn Chairman John Spark said MG “takes its disclosure obligations very seriously and has cooperated fully with ASIC during its investigation of these matters”