Economic imperatives win out over agribusiness ‘jingoism’

Peter Godfrey
by |
Two deal insiders who engineered the long and fiercely contested sale of Warrnambool Cheese and Butter (WCB) argue that agribusiness will continue to be a strong area of activity for firms.

Minter Ellison partners Tim Watkin and Alberto Colla, who advised dairy producer WCB on its sale to Canadian dairy company Saputo, suggest overseas interest in particular will continue to drive deals.

“There is no single factor for this, but most importantly Australia is seen as a provider of clean, fresh and high-quality dairy which is not always possible in other countries,” Watkin told Australasian Lawyer.
Other reasons for the strong international interest in Australian dairy and agribusiness include the expanding tastes and dietary requirements of Asia’s increasingly affluent consumers, and Australia’s convenient location within Asian time zones.
Watkin and Colla believe that the overseas enthusiasm for Australian dairy is not necessarily obvious considering the issues the industry has recently faced locally.
“The volume of milk was shrinking, the Australian dollar was making exports hard and Australia’s level of dairy consumption was finite” Watkin said.
However, the WCB deal demonstrated investor interest was indeed strong, with three separate offers from locals Murray Goulburn and Bega Cheese, as well as Canada’s Saputo.
Watkin and Colla said convincing WCB’s shareholders to accept Saputo’s offer was often challenging, as some Australians tended to be averse to local food and agricultural companies being sold to international buyers.

“It was hard to convey the commercial and economic imperatives amidst a cacophony of jingoistic and self-serving activity from competitors,” Watkin said.
Saputo’s offer was ultimately accepted, taking its ownership of WCB above 75% in a deal worth approximately $530 million.

In January, Herbert Smith Freehills advised a consortium of international private investors on its acquisition of United Dairy Power Group, Australia’s largest privately-owned dairy processor and supplier. More food fights can be expected if Pacific Equity Partners goes ahead with the rumoured sale of Peter’s Ice Cream and if Saputo continues to make purchases in the Australian market.