MG head acknowledges sale shock

MG head acknowledges sale shock

Save A Farmer

Murray Goulburn chief executive Ari Mervis has acknowledge supplier shock over the proposed sale to Canadian processor, Saputo.

Murray Goulburn (MG) chief executive Ari Mervis has acknowledged supplier shock and anger over Murray Goulburn’s decision to sell to Canadia’s Saputo but said it was the best deal possible.


But he said the average farm, of about 300 cows, would end up receiving about $100,000 more in its milk price, than they would have otherwise received, “had they carried on with our uncompetitive milk price.

GOOD DEAL: Ari Mervis, Murray Goulburn chief executive, said the Saputo deal would offer a very good solid commercial outcome that suppliers and unit holders would benefit from.

GOOD DEAL: Ari Mervis, Murray Goulburn chief executive, said the Saputo deal would offer a very good solid commercial outcome that suppliers and unit holders would benefit from.

Speaking after the co-operative’s annual general meeting, Mr Mervis said when MG was ultimately wound up, there would be further payments to suppliers and shareholders.

“Even though there is an element of emotion that the co-op won’t last, in the way it has, if the deal goes through there is a solid and very good solid commercial outcome that the suppliers and unit holders will benefit from.”

MG struck a deal to sell all of its operating assets to Saputo for $1.3 billion, just before the annual general meeting

Under the deal, farmers will receive a 40c kg/MS (kilogram/milk solids) extra for milk supplied this financial year.

Active suppliers would be paid an additional 40c kg/MS "loyalty payment" next financial year, along with commitments for milk collection and market pricing for five years.

Mr Mervis said there was obviously grief, around the situation MG found itself in.

 “There are numerous lives and livelihoods dependent on it and the construct of the co-op is something numerous suppliers have been involved with, for generations - as you rightly say, for 67 years,” Mr Mervis said.

“I think it’s always quite important to recognise whilst MG operates to co-operative principals, we are also a listed Australian Securities Exchange (ASX) entity and we have to operate under those constraints,” he said.

While there was a belief in the co-operative principals, the realities were MG was now a listed company “a hybrid, in that regard.”

He said believed supplier shareholders would endorse the decision to sell to Saputo.

“When the shareholders do consider and look at their options and the alternatives, hopefully they will come to the conclusion this is in their best interests

“It certainly provides them with a very competitive milk price, for this year, as well as a significant loyalty bonus.”

“Equally they have got a guaranatee they will be getting a competitive milk price, for the next five years, and a guarantee of collection of their milk, which are the most important things to dairy farmers.”

He said, if the deal went through, it would be a very good, solid commercial outcome for suppliers, unit and shareholders.

Chairman John Spark said MG’s constitution gave it the ability to sell assets, at any time.

“The board’s decision to go to our shareholders was because we felt that’s the right thing to do, out voting shareholders should have a part, and approve, the sale of the assets.”

Mr Mervis said he was confident farmers would benefit from the dale.

“There is a significant change in the make-up of the Australian dairy industry and I think there is now far more of a competitive set out there,” Mr Mervis said.

“There are now far more competitive and big dairy players out there, who will compete for milk, and the way they will compete for milk is by better service, more certainty and appropriate pricing – that’s the only way they will secure your milk.

“If they are not going to pay a decent price, they are not going to get your milk and you do have options as to where your milk will go to.”


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