In July, the Australian group revealed it was in “live discussions on a number of proposals” regarding its dairy units.
Beston Global Food Co. has indicated that it may be on the verge of finalising a deal for its dairy and dairy nutrition business with an unnamed party.
Following the Australian company’s July announcement that it was engaged in discussions with potential buyers on “a number of proposals,” Beston stated today (16 August) that these discussions have progressed to the point where a deal could soon be reached.
“Discussions and due diligence have now progressed with a major international dairy company, which has a specialisation in dairy nutraceuticals and functional ingredients and is a globally recognised leader in this field,” Beston disclosed in a filing with the Australian Securities Exchange.
“Beston has been advised that a binding proposal in relation to a commercial arrangement with the company will be received on or before 9 September 2024.”
However, as Beston’s shares remain suspended from trading in Australia, the company cautioned that the proposal is “not as yet in a form capable of acceptance”.
Food Future has asked Beston to clarify whether a “commercial arrangement” implies a disposal agreement.
Meanwhile, the company announced that it has completed the sale of its meat business, Provincial Food Group (PFG).
In July, Beston revealed that the subsidiary would be sold for A$4m ($2.6m) to a consortium of six businesses led by Victoria-based Milne Bay. The private group is composed of trusts and a superannuation fund “with a background in the meat-processing industry,” Beston noted in last month’s filing.
Proceeds from the transaction will be used to reduce debt, Beston previously stated.
Additionally, last month, the company said its bankers had agreed to extend debt obligation agreements from 31 July to 30 September.
Beston added today: “In response to the various corporate actions which have been initiated, the company has received several non-binding indicative offers in recent months regarding debt refinancing and equity solutions relating to Beston’s core business of dairy and dairy nutrition.”
In July, Beston explained that it had encountered financial difficulties due to a rebound in Australian milk production following the lowest output in 30 years in 2023, which had put pressure on finished production capacity.
“The effect of the higher milk volumes vs expectations has also been exacerbated by the unprecedented level of dairy imports into Australia over the course of 2023 and early 2024 and the consequential competition at retail, bulk ingredients and foodservice channels,” Beston stated at the time.
