Published: Fri, January 20, 2017
Economy | By Melissa Porter

Mondelez to sell Australian grocery business for $345 million

Australian-listed dairy company Bega Cheese will buy the bulk of Mondelez International's trans-Tasman grocery business, including the flagship Vegemite brand, for A$460 million.

Mondelez, which represents the global assets of the former Kraft Foods following its 2012 spin-off of its North American grocery business, said it will now focus on brands including Cadbury Dairy Milk chocolate and Oreos.

Indeed, Vegemite is a true icon of Australia but what many people were unaware of was that the rich yeast extract spread was actually American owned.

The company announced on Wednesday it has reached agreement to buy Mondelēz International's Australia and New Zealand grocery and cheese business, and with it some of Australia's most high-profile brands. Mondelez says it is holding onto Philadelphia cream cheese in Australia.

From this acquisition, Bega Cheese expects pro forma net revenue of A$310 million and earnings before interest, tax, depreciation and amortization of between A$40 million to A$45 million. Bega will pay $450 million for the acquisition, which will include cheeses, mayonnaise, nut spreads and Kraft products such as Mac and Cheese and, of course, Vegemite.

The transaction is expected to be completed in the first half of 2017, and Bega said it will provide new cash flow and growing businesses that mirror its existing structure, and greater diversification to its existing dairy foods and nutritional businesses.

Bega Cheese's Executive Chairman Barry Irvin said Vegemite was important to the Australian culture and he was excited to bring the product back to home soil. "We believe these iconic brands alongside the Bega Cheese brand are strong building blocks to enable Bega Cheese to become a great FMCG business", he commented.

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