Beston Global Food Company and Maggie Beer Holdings are both considering strategic sales of their dairy assets amid financial challenges and industry turbulence in Australia.
Beston Global Food Company and Maggie Beer Holdings are both contemplating significant strategic sales as they navigate a challenging period in the Australian dairy sector. This development highlights the broader turbulence within the industry, where even established players are re-evaluating their positions.
Beston Global Food Company’s Strategic Review
Beston Global Food Company, a key player in Australia’s dairy industry, is currently assessing a potential bid for its core cheese and lactoferrin business. This review signals a major shift in the company’s strategic focus. Beston, which initially acquired a 26.5% stake in Paris Creek Farms in 2015, has faced significant financial difficulties, accumulating nearly $70 million in debt by March 2024. The company reported a negative cash flow of $3.4 million for the quarter, and its shares have seen a drastic decline from 35 cents per share during its initial public offering to just 0.3 cents.
Shares in Beston were placed in a trading halt on July 1, 2024, and the company has since suspended trading as it explores asset sales. Beston’s board is currently engaged in discussions with a major international dairy company, which has made a non-binding offer for Beston’s core dairy and dairy nutrition business. This potential deal is crucial for Beston’s financial stability, with a September 9 deadline set for bids.
Maggie Beer Holdings’ Reevaluation
Simultaneously, Maggie Beer Holdings is also considering the sale of its dairy division. The company recently reported a $4.6 million write-down in the value of its Paris Creek Farms business due to a 9.5% drop in sales revenue, which fell to $14.7 million. This reduction in revenue was primarily caused by decreased milk supply. As a result, Paris Creek Farms has been classified as “an asset for sale” in Maggie Beer’s recent ASX filing.
Maggie Beer Holdings acquired Paris Creek Farms in 2017 for $34 million but is now valued at approximately $23 million. The company has also impaired the goodwill of its hampers division by $13.8 million, which was purchased in 2021 for $40 million. Maggie Beer’s shares dropped more than 9% on Monday, trading at 5.8 cents.
Industry Implications
These strategic moves by Beston and Maggie Beer reflect the ongoing pressures within the Australian dairy industry. The potential sales could significantly impact the market, reshaping the landscape of dairy operations in Australia. As both companies navigate these challenges, the outcomes of these sales will be closely watched by industry stakeholders and investors alike.
