Private equity firm buys Brownes

New Zealand-based Fonterra has completed the break up of WA business Peters & Brownes, selling Brownes to private equity investment firm Archer Capital, following last year's sale of Peters to Nestle.

DairyWest, which is owned by Archer Capital, will acquire the Brownes business which sells a range of dairy products manufactured at Balcatta and Brunswick.

The agreement is expected to be effective in early 2011.

Fonterra Brands Australia New Zealand managing director John Doumani, says the decision to sell the business reflects Fonterra's overall strategic direction in Australia.

"Our West Australian Brownes dairy business is a profitable business, with strong brands, consumer loyalty and a track record for innovation," he said.

"However, fundamentally Brownes is a regional business and it is not receiving the right level of focus within Fonterra given our decision to focus on national leadership in our priority categories of cheese, spreads, yoghurts and dairy desserts in Australia.

"Subsequently, the Brownes business will be better served as a stand-alone entity.

"Fonterra remains fully committed to Western Australia through our Mainland, Bega, Perfect Italiano, Western Star, Nestlé Ski and Nestlé Diet brands, which we will continue to develop and grow, to ensure they meet the needs of West Australian dairy consumers," he said.

All Brownes employees and existing farmer arrangements in the state, including farmgate pricing, will transfer to DairyWest.

Last year Fonterra sold the Peters brand in WA to Nestle, but retained the Brownes brand.

New Zealand-based Fonterra has completed the break up of WA business Peters & Brownes, selling Brownes to private equity investment firm Archer Capital, following last year's sale of Peters to Nestle.

DairyWest, which is owned by Archer Capital, will acquire the Brownes business which sells a range of dairy products manufactured at Balcatta and Brunswick.

The agreement is expected to be effective in early 2011.

Fonterra Brands Australia New Zealand managing director John Doumani, says the decision to sell the business reflects Fonterra's overall strategic direction in Australia.

"Our West Australian Brownes dairy business is a profitable business, with strong brands, consumer loyalty and a track record for innovation," he said.

"However, fundamentally Brownes is a regional business and it is not receiving the right level of focus within Fonterra given our decision to focus on national leadership in our priority categories of cheese, spreads, yoghurts and dairy desserts in Australia.

"Subsequently, the Brownes business will be better served as a stand-alone entity.

"Fonterra remains fully committed to Western Australia through our Mainland, Bega, Perfect Italiano, Western Star, Nestlé Ski and Nestlé Diet brands, which we will continue to develop and grow, to ensure they meet the needs of West Australian dairy consumers," he said.

All Brownes employees and existing farmer arrangements in the state, including farmgate pricing, will transfer to DairyWest.

Last year Fonterra sold the Peters brand in WA to Nestle, but retained the Brownes brand.

DairyWest Chairman and Archer Capital Partner Justin Punch said the purchase reflected the company's confidence in the strong, long term outlook for the WA dairy industry.

"DairyWest is attracted to WA's high growth economy, vibrant dairy market and Brownes' market-leading positions," Mr Punch said.

"In addition, its location in WA makes it ideally suited to capitalise on export opportunities into Asia.

"Once the transaction completes we will be working hard to position Brownes and our suppliers to take advantage of those opportunities.

"We look forward to providing Brownes as a standalone entity with the resources and backing it needs to develop and grow the business in Western Australia."

DairyWest has also agreed with Fonterra to confirm the indicative farmgate milk price for Brownes milk suppliers for the January - June 2011 supply period.

"Confirmation of the indicative price will provide Brownes' suppliers with the business certainty they need to manage their herds over the summer and autumn period," Mr Punch said.

Brownes currently purchases approximately 130 million litres of milk to supply its own fresh milk brands, as well as producing flavoured milk, private label milk, cheese and dairy desserts.

The purchase terms are confidential and the transaction is expected to be completed in early 2011.

Brownes current General Manager Tim Cusack will be appointed managing director to lead the business under its new ownership.

Archer Capital possesses considerable experience in the Australian food and beverage sector through previous ownership of Dome Coffees, John West Foods and Paradise Foods and its current ownership of Cellarmasters.

It also owns major businesses including Rebel Sports and MYOB, and was previously involved with the WA-based Emeco equipment hire business.

Through its businesses in WA, Archer already employs more than 400 full time, part time and casual employees.

"The purchase of Brownes is an important transaction for Archer Capital. We look forward to finalising the transaction early in the New Year so we can begin working with Brownes' management and staff to further develop the strong, vibrant domestic business they have built and to capture new export opportunities," Mr Punch said.