Warrnambool Cheese and Butter Factory and National Foods have completed 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 – which were acquired for $910m by National Foods 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,” he said. “It will greatly increase the scale and diversity of our business, providing more stable retail earnings to complement our existing, largely bulk commodity business.”

The joint venture 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.

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. National Foods will provide sales, marketing, distribution and logistics services to ACC.

Completion is of the deal is anticipated to occur in the first quarter of 2009.

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