Australian Dairy Farm Group ready to invest, acquire Victorian Camperdown Dairy

ASX listed milk producer Australian Dairy Farm Group announced on Tuesday that it would invest $11 million in buying a Victoria-based processor, Camperdown Dairy Company.

In 2014, ADFG indicated its wish to purchase around 15 to 17 Victorian Dairy farms ahead of 2017 and has fulfilled the same by acquiring the subsidiary processor of the online grocery delivery company, Aussie Farmers Direct. The Camperdown’s dairy located in South West Victoria can process a volume of 36 million litres of raw milk a year.

The Victorian dairy farm supplies milk to supermarket chain Woolworths and possesses valid certification for fresh milk clearance into China. As soon as the announcement of acquisition by ADFG was made, it grabbed the attention of investors, prompting a jump in share values to over 100 percent, making it reach 30 cents on Tuesday morning.

“What we’ve got here now, which I think is particularly important to Asia, is that traceability of product from the farm to the plate,” The ABC quoted ADFG director Adrian Rowley as saying. “I think that’s something that will be particularly attractive to Asian consumers where they can literally see a group that owns the farms [and] owns the processing asset.”

ADFG operates six dairy farms with the CDC milk processing facility. It claimed that the merger will provide a significant value and profit margin expansion chances in the market. The company is hopeful of doubling estimated earnings before interest, tax, depreciation and amortisation (EBITDA) applicable in 2017. ADFG expects the deal to be complete by the end of January.

Rowley has indicated that the shareholders backing the proposal include half institutions and half “retailer mum and dad investors.” He added that the group has registered quite a few number of Australian institutions and around six of them are based in Hong Kong and other two in New Zealand.

Rowley also discussed the eagerness of Aussie Farmers Direct to sell the farm and claimed that the latter would remain an important customer for the group.