Australia’s Brownes Dairy is currently up for sale, according to confirmation from the restructuring advisory firm appointed to oversee the process.
McGrathNicol Restructuring has been designated as receivers for the shares of Australian Zhiran Co. Pty Ltd, the ultimate holding company of Brownes Dairy. A statement from the firm indicated, “The appointment of the receivers is limited to the shares in AZC and does not affect the operations of Brownes Dairy, which continues to trade on a ‘business as usual’ basis.” It further detailed that the receivers will soon initiate the sale process for Brownes Dairy via the AZC shareholding.
Recently, Brownes Dairy went on the market after its lender, Mengniu Dairy Co. from China, triggered a call on a $200 million loan. The company was acquired from Archer Capital by Australia Zhiran Co. in 2017 through a consortium that included Changchun Lianxin Investment Consulting Company.
Mengniu Dairy played a crucial role as a lender during this acquisition. In an interview with ABC’s Western Australia Country Hour, Brownes Dairy CEO Natalie Sarich-Dayton elaborated: “On Monday 14 April, McGrathNicol were appointed over the shares in our holding company Australian Zhiran Co by China Mengniu Dairy, one of the key lenders behind the original acquisition of Brownes Dairy.” She clarified, “The process that unfolds is related solely to the shareholding level above Brownes Dairy. It has absolutely nothing to do with our day-to-day operations in Western Australia. It’s business as usual for Brownes Dairy.”
Sarich-Dayton noted that a loan payment default led Mengniu to pursue the recovery of funds. “It’s absolutely nothing to do with our operation in Western Australia. This is purely at our parent ownership level back in China between two parties … it’s got nothing to do with Brownes. Brownes is a very profitable business; we are cash positive. There is absolutely no risk to our operations here.”
While acknowledging the current ownership structure, Sarich-Dayton expressed support for a potential return to Australian ownership. “We had an incredible ownership structure over the business over the last seven years. We don’t have debt at Brownes Dairy. If we end up back in Australian hands, that would be absolutely wonderful for our brand and our business.”
Neither Brownes Dairy nor Mengniu Dairy have provided a comment on this situation yet.
Established in 1886, Brownes Dairy is recognized as the oldest dairy company in Western Australia. It distributes a variety of yogurt, cheese, and coffee products nationally through major Australian supermarkets, including Coles, Woolworths, and IGA.
In February, Mengniu Dairy announced a profit warning for 2024, citing declining sales and impairments in business units. The Hong Kong-listed entity anticipates a profit ranging from 50 million yuan ($6.9 million) to 250 million yuan for 2024, a substantial decrease from 4.8 billion yuan in 2023. This drop is linked to impairment provisions at its subsidiary Bellamy’s Australia and asset devaluation at China Modern Dairy.
Additionally, in October, Mengniu Dairy’s vice chairman and former CEO, Jeffrey Minfang Lu, tendered his resignation.
