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Here’s Why Bega Cheese Ltd (BGA) Is Spending $250m On Koroit Dairy

Bega Cheese Ltd (ASX: BGA) just announced to the market that it is spending $250 million to acquire Saputo’s Dairy Australia’s Koroit dairy processing facility.

Bega Cheese is one of Australia’s largest dairy businesses, supplying cheese under the Bega brand and also owns the Vegemite brand.

The processing facility is located at Koroit in Western Victoria and currently processes around 300 mega litres of milk into bulk and butter, commodity and milk powders.

Bega Cheese will pay $250 million, which includes average inventory, which Bega will fund with debt. The company thinks it will generate EBITDA (click here to learn what EBITDA is) profit of $20 million at the current milk intake with room for growth.

The Koroit Facility will provide us with a significant presence in Western Victoria and operational flexibility with our other milk processing sites,” Bega Cheese’s CEO, Mr Paul van Heerwaarden, said. 

“Importantly the acquisition will support the continued growth of our core dairy business and provide domestic and export customers with an expanded range of products. We welcome the 108 employees of Koroit to Bega Cheese.”

The Bega share price was trading 0.35% lower Thursday morning, according to Commsec.

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