United Dairy Products Sold For $70m

04 Feb 2014 --- Hong Kong-based businessman ­William Hui has acquired Australia's biggest privately-owned dairy processor United Dairy Power for about $70 million in the latest deal in the red hot Australian dairy sector.

Mr Hui, 46, is chairman and major shareholder of CD, DVD and video cassette manufacturer Swing Media Technology, which is listed on the Singapore Stock Exchange with a market value of $42 million according to Bloomberg.

The sale comes amid a spate of mergers and acquisitions in Australian dairy, the most high profile being Canadian dairy giant Saputo's acquisition of the nation's oldest and fourth-biggest dairy processor Warrnambool Cheese & Butter in a hotly contested $530 million deal.

Like Saputo, Mr Hui is attracted to the surging demand for milk powders, cheeses, infant formula and other dairy products in Asia. Australian dairy is seen as high quality and safe, and the proximity to Asia makes the country an ideal launching pad into Asian markets.

United Dairy Power operates in South Australia and Victoria, processing 500 million litres of milk every year, of which 350 million litres are collected directly from UDP suppliers while the remainder comes from competitors.

The company generates annual sales in excess of $200 million and profits of more than $15 million, and was wholly owned by its chief executive and founder Tony Esposito.

Mr Esposito has been seeking a buyer for UDP for almost two years.

He will now step back from day-to-day operations at the group he started in 1999, but it is understood he will remain involved in the business.

UDP began as a broker of milk and in the liquid ingredients space. The company subsequently became a major processor with the purchases of Lion's Murray Bridge and Jervois Dairy factories in South Australia. Combined, the plants produce about 15,000 tonnes of dairy products a year, including butter, whey powder and cheese (marketed under UDP's Caboolture brand).

Lion is UDP's biggest customer.

Mr Hui was advised by Rabobank and Rothschild. The two investment banks have a global co-operation agreement on agribusiness deals and have been heavily involved in the sector.