Saputo Inc., Montréal, said it entered into an agreement to acquire the business of Murray Goulburn Co-Operative Co. Ltd., based in Australia.

The purchase price for the transaction is CDN$1.29 billion on a debt-free basis and will be financed through a newly committed bank loan, Saputo said. The transaction, which was unanimously recommended by the Murray Goulburn board of directors in the absence of a superior proposal, is subject to the approval of Murray Goulburn shareholders and customary conditions — including foreign investment approval and clearance by the Australian Competition and Consumer Commission. It is also subject to an independent expert concluding that the transaction is in the best interest of Murray Goulburn shareholders. The transaction is expected to close in the first half of calendar year 2018.

Murray Goulburn produces a full range of dairy foods, including drinking milk, milk powder, cheese, butter and dairy beverages, as well as a range of ingredients and nutritional products such as infant formula, Saputo said. The company supplies the retail and foodservice industries globally with its flagship Devondale, Liddells and Murray Goulburn ingredient brands.

Murray Goulburn has approximately 2,300 employees and operates 11 manufacturing facilities across Australia and China, Saputo said. For the 12-month period ending June 30, 2017, the company had revenues of approximately CDN$2.5 billion and earnings before interest, taxes, depreciation, amortization, milk supply support package forgiveness, rationalization costs, write-downs and non-recurring costs (adjusted EBITDA) of approximately CDN$78 million.

Saputo said the acquisition of Murray Goulburn will add to and complement the activities of its Dairy Division, reinforcing its commitment to strengthen its presence in the Australian market. Saputo intends to continue to invest in its Australian platform and contribute to the ongoing development of its domestic and international business.

Moelis & Company is acting as financial advisor to Saputo, while Ash St. Partners Pty Ltd and Clayton Utz are acting as legal counsel. National Bank Financial and BMO Capital Markets are co-lead arrangers and joint bookrunners, Saputo said.