Murray Goulburn has been all but sold to Canadian processor Saputo for $1.3 billion.
MG suppliers were informed via a supplier letter and the media on the morning of the company’s annual general meeting on Friday.
Suppliers attended the co-operative’s annual general meeting in part to hear the board and executive’s plans for the co-op and were surprised learn that the deal with Saputo had been agreed to.
Many suppliers believed any sale would require 90% approval from shareholders. However, it was revealed that under the constitution the board could sell all assets without any supplier approval.
MG chair John Spark said this would have been “abhorrent” and the board will require a majority approval at an early meeting to be held next year.
The sale requires approval from both the ACCC and Foreign Investment Review Board (FIRB). Supplier meetings will begin in November and Mr Spark said the sale could be completed in the first half of 2018.
An amount of money will be retained by MG to deal with current litigation launched against the co-operative. Any money left over from this amount will then be returned to Saputo. MG will then be “wound up”.
MG suppliers will receive a step up of 40c/kg MS for the 2017-18 year for milk suppliers from November 1. On completion of the sale, this money will also be paid for milk supplied from July to October 2017.
An additional 40c/kg will be paid for active Murray Goulburn suppliers.
MG will retain any liability in relation to the current ACCC proceedings, ASIC investigation and unit holder class action.
For this reason MG will retain part of the proceeds of the sale until the conclusion of these matters. Further cash distributions will be made following such conclusion, or earlier if appropriate.
The board took questions from farmer suppliers and unit holders for more than an hour.
Cobram farmer Brad Adams said he was shocked when he heard the news of the sale.
“I would have liked some remnants of a co-op left,” he said.
“To have this done has been a shock. The directors never came to us and asked what we wanted. They should have said ‘it’s your company, what do you want to see?’”
“I need to read the finer details but they should have received more money for the assets.”