SYDNEY, AUSTRALIA: Synlait Milk Limited (Synlait) has announced plans to divest its Dairyworks and Talbot Forest Cheese businesses. The move comes as Synlait undertakes a strategy and capital structure refresh, including an asset review.
Synlait CEO Grant Watson said the divestment would allow the company to focus on its core businesses of Advanced Nutrition and Foodservice.
“Dairyworks is an excellent business, but it is not core to our diversified growth strategy,” Watson said. “We need to focus on the business units where we have a clear right to win.”
Watson said Synlait had engaged investment banking firm Jarden to advise on the divestment. The proceeds from the sale would be used to pay down debt.
Dairyworks CEO Tim Carter said Synlait had been a “great partner” and had helped the business grow significantly over the past few years.
“We now need to transition to having a greater reach globally, and this requires an owner which will continue to help us unlock further export markets,” Carter said.
Synlait is one of New Zealand’s largest dairy companies. It produces a range of dairy products, including infant formula, cheese, and milk powder. The company has operations in New Zealand, Australia, and China.
The divestment of Dairyworks and Talbot Forest Cheese is the latest in a series of moves by Synlait to streamline its business and focus on its core operations. In recent years, the company has also sold its ingredients business and its stake in a Chinese dairy company.
The divestment is likely to be welcomed by investors, who have been concerned about Synlait’s debt levels. The company’s debt-to-equity ratio is currently at 1.5 times, which is high for a dairy company.
The divestment is also likely to be seen as a positive sign for the New Zealand dairy industry. It shows that Synlait is confident in the long-term prospects of the industry and is committed to investing in its future.
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