Bega Cheese is selling one of its huge Tatura Milk spray dryers that makes milk powder, but executive chairman Barry Irvin denies its akin to ‘‘selling off the farm’’.
‘‘It’s more like selling a tractor, and we’re still driving it,’’ Mr Irvin said.
‘‘This deal is innovative. We think it’s a good deal all the way round.’’
The company is selling the 15-year-old multi-stage dryer at the Tatura factory to help fund the $460million purchase of Vegemite and other food businesses announced in January.
Mr Irvin said Tatura would continue to operate the equipment and retain the right to put its own milk through the dryer for sale to other parties.
Bega has sold the dryer and the Derrimut infant formula finishing plant to former business partner Mead Johnson, which is an international company specialising in child and infant foods.
As a part of the transaction, Bega Cheese has secured a 10-year service and access agreement with Mead Johnson for the spray dryer and finishing plant.
Asked if there were other similar assets he would consider selling, Mr Irvin said he couldn’t think of any, but ‘‘never say never’’.
He said the sale of the dryer and finishing plant together with the ongoing relationship with Mead Johnson was strategically and financially important for Bega Cheese.
‘‘It secures revenue streams from these assets and releases capital which will be used to fund our recent purchase of Mondelez’ Australian grocery business, including Vegemite.”
Bega Cheese chief executive officer Paul van Heerwaarden said the company’s continued access to the spray dryer and finishing plant, along with its other spray drying assets, meant it could continue to supply its customers.
“We are proud that Mead Johnson has recognised the quality of Bega Cheese’s assets and our global reputation for producing premium infant nutrition products,’’ he said.
‘‘We are excited to continue to work with them over the next 10 years.’’
The transaction is expected to be completed before the end of the financial year and is subject to customary conditions precedent for a transaction of this nature.
Bega Cheese was advised by Addisons Lawyers and Kidder Williams.