Warrrnambool Cheese and Butter Set for Joint Venture with National Foods

ACC will be owned 50:50 by NF and WCB, and will own and operate the retail cheese assets of Dairy Farmers that were acquired by NF in November 2008.

01/01/08 Warrnambool Cheese and Butter Factory Company Holdings Limited and National Foods Limited (NF) have executed agreements to form a joint venture, Australian Cheese Company Pty Ltd (ACC), to operate the cheese business of Australian Co-operative Foods Limited (Dairy Farmers).

ACC will be owned 50:50 by NF and WCB, and will own and operate the retail cheese assets of Dairy Farmers that were acquired by NF in November 2008. WCB will contribute $105 million for its share in ACC. Neil Kearney, CEO and Managing Director of WCB, welcomed the agreement of ACC. “Agreement of the cheese joint venture with National Foods marks an exciting step in the development of WCB. The joint venture provides WCB with ownership in some of Australia’s premier cheese brands. It will greatly increase the scale and diversity of our business, providing more stable retail earnings to complement our existing, largely bulk commodity business.”

NF Managing Director Ashley Waugh commented: “National Foods looks forward to working with Warrnambool Cheese and Butter. This joint venture brings together the complementary skills of both parties – brand management, sales and marketing skills from National Foods, and efficient cheese manufacture skills and capabilities from Warrnambool Cheese and Butter.”

ACC Assets
ACC will own Dairy Farmers’ leading Australian cheese brands including Coon, Cracker Barrel and Mil Lel. It will also operate the cheese manufacturing, cutting and wrapping facilities of Dairy Farmers at Allansford, Simpson and Jervois. Cheese manufactured at the Malanda milk factory will be supplied to ACC.

Role of WCB
Both WCB and NF will supply goods and services to the joint venture, reflecting the particular expertise of each joint venture party. WCB will provide management services in relation to the cheese manufacturing, cutting and wrapping facilities at Simpson, Allansford and Jervois. These services will include operation of the sites, employee management, supervising and maintaining cheese stocks, plant maintenance and waste treatment. WCB will be reimbursed its costs for providing these services to ACC and will also receive a management fee from June 2010. In addition, WCB will continue to supply bulk cheese from its Allansford plant to ACC, and will continue to supply milk to the Simpson plant, both on similar terms as currently supplied.

Role of NF
NF will provide sales, marketing, distribution and logistics services to ACC. NF will be reimbursed its costs for providing these services to ACC and will also receive a sales, distribution and marketing fee from June 2012.