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Cheese producers Bega have acquired a $250 million production facility in Koroit in Western Victoria to boost its operations.
The Koroit facility, managed by Saputo Dairy Australia (SDA) currently processes milk into bulk and retail butter, commodity and retail milk powders and growing up milk powder.
The listed cheese producer has also entered into a Transition Services Agreement and a Milk Supply Guarantee Agreement with SDA whereby SDA is required to guarantee supply milk until 30 June 2020.
Chief executive officer of Bega, Paul van Heerwaarden, says the deal will enable the company's operations in Victoria to greatly expand.
"The Koroit facility will provide us with a significant presence in Western Victoria and operational flexibility with our other milk processing sites," says van Heerwaarden.
"Importantly the acquisition will support the continued growth of our core dairy business and provide domestic and export customers with an expanded range of products."
The 180 employees currently working at Koroit will become employees of Bega.
Bega expexts the Koroit facility to generate annualised earnings of $20 million assuming production continues at the same level it currently is.
The integration of the Koroit facility into Bega's core business could take until FY21 to complete.
Shares in Bega Cheese are up 5.71 per cent to $8.14 per share at 1.35pm AEST.
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