Bega Cheese executive chairman Barry Irvin confirmed the deal on Thursday, with the sale expected to be completed by January 2021.
"We are delighted to announce this acquisition which we believe will create significant value for shareholders," Mr Irvin said.
"The acquisition delivers important industry consolidation and value creation with synergies across the entire supply chain. The expanded product range, manufacturing and distribution infrastructure and brand portfolio realises our ambition of creating a truly great Australian food company.”
The purchase will be funded by a combination of new and extended debt facilities and the proceeds from a $401 million underwritten entitlement offer and placement.
Lion Dairy produces a number of big name fresh milk brands including Pura, Dare, Farmers Union, Big M, Masters, and Dairy Farmers, as well as yoghurt and juice brands Yoplait, Farmers Union, Juice Brothers and Daily Juice.
It also has Australia’s largest national cold chain distribution network supplying food service and convenience stores, and a national manufacturing footprint of13 sites.
Bega Cheese chief executive officer Paul van Heerwaarden welcomed the acquisition.
"We are very pleased with the performance of acquisitions made in recent years which are achieving or exceeding our profit targets. The recent company restructure and ERP implementation will allow us to integrate this Acquisition and take advantage of the various synergies and growth opportunities across domestic and international markets.”
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