Aussie milk super-merger on the cards

By Boyd Champness

JUST weeks after Victorian farmers voted for deregulation, the Australian milk industry is set for a massive shake-up, with a possible merger between Australias second- and third-largest dairy manufacturers.

Dairy giants Bonlac Foods and Australian Co-operative Foods (Dairy Farmers) are investigating the feasibility of a merger between the two co-operatives, which could see the creation of a mega dairy co-operative.

The review is expected to take two months.

According to the Stock and Land, Bonlac ranks just behind Murray Goulburn as the largest milk manufacturer, with Dairy Farmers a close third.

A merged Dairy Farmers and Bonlac would comfortably become the nations largest dairy processor, with a combined revenue of A$2.5 billion (990m) a year.

According to the newspaper, a marriage would help both companies tap into new markets.

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Bruton Knowles

Victorian-based Bonlac Foods is a major exporter of value-added dairy products, while Dairy Farmers is the largest fresh milk supplier in New South Wales and the second largest in Queensland.

A merger with Dairy Farmers would provide Bonlac with a walk-up entry into the fresh milk markets of Queensland and NSW, with both states expected to follow Victorias lead and support deregulation.

The merger would also help cash-strapped NSW-based Dairy Farmers fight off a merger-cum-takeover bid from Italian milk business Parmalat.

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