Australian packaged food producer TasFoods Ltd. said May 13 that it has agreed to acquire the milk processing assets and brands of Betta Milk Co-Operative Society Ltd. for A$11.5 million in cash.
Betta Milk was established in 1956. Like TasFoods, it is based in Tasmania. It processes approximately 10 million liters of milk annually and holds 17% of the fresh milk market in the Australian state. The company generated A$16.4 million in net revenue in 2018.
The transaction includes the transfer of Betta Milk's recently upgraded processing facility in Burnie, Tasmania, as well as its distribution centers in Tasmania's Launceston and Hobart.
TasFoods plans to fund the transaction through internal and external sources, including an A$8 million non-renounceable rights issue, which has been fully underwritten at 12 Australian cents per share. TasFoods signed a binding agreement with Wentworth Global Capital Partners Pty. Ltd. for the rights issue.
TasFoods said the deal would strengthen its existing dairy business — which includes dairy brands Pyengana Dairy, Meander Valley Dairy and Robur Farm — leading to significant revenue growth and operational synergies.
The deal is expected to close in late July, subject to final due diligence and the approval of Betta Milk's shareholders.
TasFoods added that it is on track to report positive EBITDA from existing operations for the year ending Dec. 31.