Australia’s Beston Global Food Co. (BFC) has confirmed that Japan’s Megmilk Snow Brand Co. has proposed an offer for its dairy assets.
According to a statement released on the stock exchange, Beston Global indicated that Megmilk Snow Brand intends to acquire its cheese and lactoferrin production operations located in Jervois, South Australia. This move comes as no surprise, given that in July, BFC mentioned it was engaged in “live discussions on a number of proposals” concerning its dairy units. Furthermore, just last month, it hinted at being on the brink of finalizing a deal for its dairy and dairy nutrition operations with a yet-to-be-identified buyer.
While BFC has disclosed the potential acquirer, it has done so by referencing a specific production facility. This raises concerns regarding the fate of its remaining dairy assets.
In the announcement, BFC detailed that Megmilk Snow Brand’s non-binding offer “contains a number of components” and hinges on several conditions, including bank and shareholder approvals. The board at BFC is actively evaluating these conditions while engaging in ongoing discussions with Megmilk Snow Brand for clarity on various issues, such as the total purchase price.
Megmilk Snow Brand is well-established on the Tokyo Stock Exchange and ranks as one of Japan’s largest dairy firms, boasting a market capitalization of approximately A$1.7 billion (US$1.13 billion). Over the past three decades, it has acquired several dairy companies in Australia, including the Unicorn Cheese Company in New South Wales and an infant formula packaging facility in Tatura, also in New South Wales.
Additionally, it has established operations in Taiwan, Indonesia, China, Hong Kong, Malaysia, and the United States. Recently, the company announced plans to expand into Vietnam with the construction of a cheese processing plant in Ho Chi Minh City.
BFC holds the title of the largest dairy company in South Australia and the seventh largest in Australia. However, in July, it revealed that it has been grappling with financial challenges due to an increase in Australian milk production following a historic low output in 2023—the lowest seen in 30 years. This situation has strained their finished production capacity significantly.
“The effect of the higher milk volumes vs expectations has also been exacerbated by the unprecedented level of dairy imports into Australia over the course of 2023 and early 2024 and the consequential competition at retail, bulk ingredients, and foodservice channels,” Beston stated during that time.
In summary, the food and beverage industry is witnessing significant movements, with companies like Beston Global navigating potential acquisitions and market challenges, indicative of broader consumer trends and dynamics within the food and drink business. As these shifts unfold, stakeholders will be keenly watching how these developments shape the competitive landscape.
