New Zealand-based dairy giant Fonterra announced late last week that it had entered into a contract to acquire the processing equipment, related services, intellectual property and trademarks of yogurt manufacturer, Tamar Valley Dairy.
The company, which boasts a yogurt portfolio including Classic, Lite, Greek Style and No-Fat variations of its Tamar Valley Dairy brand, went into voluntary administration in September 2013.
Deloitte Restructuring Services, which was appointed as administrator of the firm, attributed the Tamar Valley's decision to “an extremely competitive sector” and a “slowdown in sales and pressure on margins.”
It confirmed last week that Fonterra had agreed to acquire the business and assets of Tamar Valley Dairy, but declined to disclose the sale figure.
Strengthen chilled dairy position
Fonterra already operates two manufacturing facilities in Tasmania, at Spreyton and Wynyard, and is currently responsible for processing more than half of the state’s milk.
Commenting, Judith Swales, managing director of Fonterra Australia, branded the deal “an important step in strengthening Fonterra’s strong national position in the chilled dairy segment in Australia.”
“Acquiring the Tamar Valley Dairy yogurt business is an important step in and complements our existing yogurt portfolio, where we hold a market-leading position in mainstream yogurt through the Nestlé SKI brand.”
Once the deal has been completed, Fonterra intends to invest in the improvement of Tamar Valley's manufacturing assets, its quality and safety systems, and its innovation capabilities.
“Tamar Valley Dairy has a strong future," Swales said. "We see tremendous opportunities to build a sustainable, competitive business for the long term.”
Retain “as many" employees as possible
Swales added that work will now begin to safeguard as many of the approximate 170 positions at Tamar Valley Dairy as possible.
“In reaching today’s agreement, the parties have worked closely to move the business forward, while addressing two key considerations – that the business remains in Tasmania, which Fonterra is committed to, and that as many Tamar Valley Dairy employees as possible remain employed,” she said.
Commenting on the deal, Deloitte’s Glen Kanevsky said: “We are extremely pleased with the sale.”
“While we still have some milestones to meet before completion on 25 November, we will work closely with Fonterra over the coming weeks to ensure that the transition of the business is managed in a way that minimises any disruption to day-to-day operations,” he added.
If completed, the acquisition will be effective from 25 November.