Australia's Bonlac, Dairy Farmers Could Merge; Parmalat Waits in Wings
The boards of directors of the companies established of a joint committee to consider a merger of the enterprises. It is expected that the review will take approximately two months to complete.
Ian Langdon, chairman of Dairy Farmers, said, "A merger of Dairy Farmers and Bonlac Foods would create Australia's largest farmer owned dairy business with revenue in excess of $2.5 billion and strong market positions in milk, natural cheese, yoghurt, spreads and added-value ingredients."
"The dairy industry is entering a new environment facing deregulation, global rationalisation and increased domestic and international competition," said Hill. "Our preliminary discussions indicate that significant synergies may exist between our two co-operatives. We will thoroughly investigate all opportunities with a potential to benefit our supplier shareholders."
Both chairmen stressed that talks were at the exploratory stage. A proposal will not be put to shareholders unless there is a compelling case for merging the two co-operatives. Shareholders will make the ultimate decision.
Sloan's New Role As COO
With the news of merger talks comes a change at the top for Bonlac. According to transcripts the company released to the Australian Stock Exchange, Phil Scanlan CEO and managing director will leave Bonlac Foods "to pursue other interests." During Scanlan's tenure, Bonlac Foods grew into a company with four businesses: Ingredients, Consumer Products, Bioscience and Beverages. Along with the news of the CEO's departure came news that
Alex Sloan has been appointed acting chief operating officer and will be responsible for the operational performance of business while merger talks were underway, according to Bill Hill, Bonlac chairman. Sloan joined Bonlac in February 1997 after four years in senior management at Campbell Australasia Pty Ltd, holding the positions of Managing Director, Soups and Beverages, Australia and New Zealand; General Manager Campbell Soups Australia Pty Ltd; and General Manager Spring Valley Beverages Pty Ltd.
As general manager of consumer products at Bonlac, Sloan guided the company's retail, food service and beverage businesses to prominent positions in their respective markets, the company said.
Parmalat Takeover Scheme Looms
According to an official announcement, Dairy Farmers confirmed that today's announcement "does not affect its assessment of the Parmalat takeover scheme nor its intention to continue with its capital restructure plan, with the expectation of a member vote on the restructure plan in the second quarter of the year."
Langdon was referring to a recent merger proposal by international dairy giant Parmalat Finanziaria SpA. At the time, the co-op was seen as poised for great profit growth and a cheap takeover target, and Langdon, speaking at the 1999 Deutsche Bank Dairy Conference in Sydney on Nov. 10, he called the rumor a "compliment … and it will probably lead to a proposition or a bid by Parmalat to our farmers."
Part of a rumored deal involved merging Dairy Farmers with Parmalat's Queensland-based dairy, Pauls Ltd. Langdon, lacking a firm offer, indicated he would be open-minded to a profitable deal. (See related article)
In related Australia dairy news, controversy surrounding deregulation of Australia's Victorian dairy industry continues. Despite arguments in December by NSW Country Labor South Coast representative Wayne Smith that deregulation would threaten 600 New South Wales jobs and 2,000 Victoria jobs would be lost, the federal government has been pushing for deregulation by July 1, 2000.