The board will recommend the co-operative sell all its operating assets and liabilities to Saptuo, which owns Warrnambool Cheese and Butter, for $1.31 billion.
The deal will require the approval of the Foreign Investment Review Board (FIRB) and the Australian Competition and Consumer Commission (ACCC).
“MG has reached a position where, as an independent company, its debt was simply too high given the significant milk loss,” said chairman John Spark.
But suppliers have reacted to the announcement with with dismay and shock.
Mead supplier Di Bowles, who said she’d be attending today’s annual general meeting, said she was “not very happy.”
Former MG supplier, Derryvale Dairy’s Bruce Glasgow, Gippsland said it came as a bit of a shock.
Others said they were in the dark about the recommendation and needed more time to process it.
Naringal’s Hayden Ballinger said a disappointing series of events had led to the decision.
“The reality is, it’s really disappointing for those who believe in the importance of having an Australian owned co-operative,” Mr Ballinger said.
“But that has to be balanced with the reality of MG’s current situation and the need to be competitive.
“It’s a pity it had to come to this.”
Simpson’s Aaron Crowle said he was “quite shocked – it’s unexpected, it popped out of nowhere.”
“But something had to happen, where were we going?,” Mr Crowle said.
“We are not really going anywhere.”
Another western Victorian supplier Joe McLaren, said suppliers were in the dark, over what was happening.
“I don’t really know what’s happening, without have a look at it.”
MG has also announced its suppliers will be now paid a 40 cents a kilogram milk solids (kg/MS) step up to $5.60/kgMS for the FY18 farmgate milk price from November 1, and backpay, on completion of the transaction, for milk supplied from July to October 2017.
The company will also pay a further 40c/kgMS loyalty payment in 2017-18 for its active suppliers.