Saputo completes acquisition of speciality cheese business of Lion Dairy & Drinks

Canadian dairy firm Saputo has completed the acquisition of the speciality cheese business of Lion Dairy & Drinks for A$280m ($191m), on a cash-free and debt-free basis.

The speciality cheese business of Lion-Dairy & Drinks, a subsidiary of Japanese company Kirin, operates two production facilities, which are located in Burnie and King Island, Tasmania (Australia).

With nearly 400 employees, the cheese business sells speciality cheeses under a wide range of Australian brands, including South Cape, Tasmanian Heritage, Mersey Valley and King Island Dairy.

With the completion of the acquisition, Saputo’s Australian dairy division is expected to enhance its portfolio with new product additions, as well as complement its current activities in the region.

The deal was first announced in April  when Saputo entered an agreement to acquire the Speciality Cheese Business of Lion-Dairy & Drinks in Australia for A$280m ($197m).

In August 2019, the Australian Competition and Consumer Commission (ACCC) raised competition concerns over the proposed acquisition of Lion Dairy & Drinks’ cheese business.

ACCC expressed concerns as the proposed deal would see the merger of two plants, which are reported to be the second and third biggest buyers of raw milk in Tasmania.

At that time, ACCC deputy chair Mick Keogh said: “We are concerned that combining these two operators may lead to Tasmanian dairy farmers being paid lower prices for their raw milk.

“If Saputo acquires the Burnie and King Island Lion plants, we will be left with a structure where two companies, Fonterra and Saputo, buy more than 80% of the raw milk produced in Tasmania.

“Each would have a market share several times bigger than the next largest buyer of raw milk, Mondelez-Cadbury.”

However, following an investigation, ACCC approved Saputo Dairy Australia’s proposal to acquire Lion Dairy & Drinks’ cheese business in Tasmania last month.