Brownes Dairy, one of the country’s oldest dairy companies and the largest milk producer in Western Australia, has been put up for sale after its biggest lender, China’s Mengniu Dairy Co, called in its $200 million loan.
Brownes Dairy to be sold after Chinese backers call in $200m loan

Brownes Dairy, one of the country’s oldest dairy companies and the largest milk producer in Western Australia, has been put up for sale after its biggest lender, China’s Mengniu Dairy Co, called in its $200 million loan.

Brownes Dairy is the market leader in WA in milk but also sells a range of yoghurt, cheese and coffee nationally through Coles, Woolworths and IGA.

The dairy category is already busy with merger and acquisition activity, with New Zealand co-operative Fonterra running a dual-track process for its consumer business Mainland Group, which has brands including Western Star butter, and Mainland and Perfect Italiano cheese.

Brownes was established in 1886, employs about 300 people and has annual sales approaching $300 million. It began selling its Hunt and Brew ready-to-drink cold coffee in the United Kingdom last year.

McGrathNicol’s Keith Crawford was appointed by a Mengniu subsidiary to sell Brownes. Mengniu is listed on the Hong Kong Stock Exchange and had lent $200 million to Australian Zhiran, Brownes’ parent company.

Crawford said there would be no change to Brownes Dairy’s day-to-day operations. The company has been owned by Chinese investors for eight years after being sold by Archer Capital. The sale came as Mengniu was rapidly expanding in Australia, proposing to spend $600 million buying brands including Dairy Farmers, Pura and Farmers Union from Lion. That transaction was blocked by then treasurer Josh Frydenberg.

The diplomatic rift enabled Bega Cheese to create a major ASX-listed food and drink group, which acquired the Lion dairy and drinks business for $560 million to add milk, juice and yoghurt brands to portfolio

“We are engaging with key stakeholders to commence an orderly sale process for the iconic Brownes Dairy,” Crawford said.

“As our appointment is limited to holding company shares only, we do not anticipate any impact on day-to-day operations.”

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