Key points:
Coles says the purchase of two milk processing plants in Sydney and Melbourne will secure its long-term supply
The two plants were built by the Murray Goulburn cooperative 10 years ago for $140 million
Coles buys them off Saputo for $105m
Coles has announced to the Australian Stock Exchange Monday that it will buy the sites at Laverton in Melbourne’s suburbs and Erskine Park in Sydney’s suburbs.
The factories produce Coles Own Brand 2L and 3L milk.
“Whilst improving security of our milk supply and our supply chain resilience in the dairy sector, these facilities also have sufficient capacity to facilitate further growth opportunities through new product innovation,” said Coles CEO Steven Cain said in a statement.
Saputo’s statement mentioned the workers.
“The site employs approximately 48 people,” it said.
“All employees will receive an offer to transfer their employment to Coles Group Limited, and Saputo Dairy Australia will work closely with the site teams to support them through this changeover.”
Both Coles and Saputo have declined to speak to the ABC’s Country Hour Monday.
Milk plants sell for less than the cost to build them
The two plants cost $140 million to build in 2013-14, and both were core to Murray Goulburn’s then-managing director Gary Helou’s plan to modernise the company.
The since disgraced Mr Helou signed a 10-year deal to supply $1per litre milk to Coles’ private brand in 2013.
Laverton was opened by Prime Minister Tony Abbott and Victorian Premier Denis Napthine in 2014 — built at a cost of over $80 million — and was described by Mr Helou as a “first of its kind in the country and the most important dairy asset built in Australia for 15 years.”
The sister plant in Sydney, on five hectares at Erskine Park cost over $60 million to build.
Both new plants are on large sites in metropolitan areas of Australia’s largest cities.
Murray Goulburn’s collapse and Saputo’s entry
Murray Goulburn ultimately collapsed and was sold to Canadian dairy company Saputo.
Now at the end of the 10-year deal to supply cheap milk to Coles, Saputo has sold the factories to the supermarket giant for less than it cost to build them.
The acquisition is expected to be completed in the first half of fiscal 2024.
