Beston Global Food Company and Maggie Beer Holdings Consider Strategic Sales
Source: DairyNews.today
Beston Global Food Company is currently evaluating a potential bid for its core cheese and lactoferrin business, signaling a significant shift in its strategic focus. Simultaneously, Maggie Beer Holdings has also indicated its intent to sell its dairy division, marking a period of reevaluation and potential consolidation within the Australian dairy sector.
This development comes at a time when the broader dairy industry is experiencing turbulence, with large-scale assets like Fonterra’s multi-billion-dollar holdings also on the market. The difficulties faced by smaller players like Beston and Maggie Beer illustrate the challenges of operating in the dairy sector, especially at the lower end of the market.
Maggie Beer Holdings recently reported a $4.6 million write-down in the value of its Paris Creek Farms business, driven by a 9.5% drop in sales revenue to $14.7 million, largely due to reduced milk supply. The company subtly noted in its recent ASX filing that Paris Creek is now classified as "an asset for sale." This decision highlights the ongoing struggles within its dairy operations.
Interestingly, Paris Creek’s former owner, Beston Global Food Company, also upd ated the market, revealing that its shares remain suspended as it considers a non-binding offer for part or all of its key South Australian cheese and lactoferrin processing operations. Beston, which originally purchased a 26.5% stake in the then-biodynamic B-d. Farm Paris Creek before its ASX listing in 2015, has since narrowed its focus almost exclusively to dairy, exiting other agricultural investments.
However, despite this concentration, Beston has struggled financially, accumulating nearly $70 million in debt by March 2024 and reporting a negative cash flow of $3.4 million for the quarter. Earlier this year, the company’s primary lender, NAB, attempted to offload $55 million of Beston’s debt but found no buyers.
Beston shares were placed in a trading halt on July 1, followed by a suspension as the company pursued asset sales to secure the best possible outcome for its shareholders. Those who invested during the initial public offering at 35 cents per share are now facing a near-total loss, with shares last valued at 0.3 cents.
On Friday, Beston informed the ASX that it is progressing with due diligence involving a major international dairy company, which has made a non-binding indicative offer for Beston’s core dairy and dairy nutrition business. The discussions are ongoing and subject to nondisclosure agreements, and the offer is not yet in a form that can be accepted. Beston’s board believes that a successful transaction is crucial for the company’s financial viability.
Given the potential deal, Beston is currently unable to accurately assess the carrying value of its assets or appropriate impairment charges, delaying the filing of its full-year results. The company has se t a September 9 deadline for bids.
Maggie Beer Holdings, which acquired Paris Creek in 2017 for $34 million, including $30.5 million in cash and $3.5 million in shares, is now itself valued at approximately $23 million. The company’s shares dropped more than 9% on Monday, trading at 5.8 cents. Additionally, Maggie Beer impaired the goodwill of its hampers division, acquired in 2021 for $40 million, by $13.8 million.
These strategic moves by Beston and Maggie Beer reflect the pressures faced by smaller dairy companies in a challenging market environment, and the outcomes of these potential sales could reshape the landscape of the Australian dairy industry.
Maggie Beer Holdings recently reported a $4.6 million write-down in the value of its Paris Creek Farms business, driven by a 9.5% drop in sales revenue to $14.7 million, largely due to reduced milk supply. The company subtly noted in its recent ASX filing that Paris Creek is now classified as "an asset for sale." This decision highlights the ongoing struggles within its dairy operations.
Interestingly, Paris Creek’s former owner, Beston Global Food Company, also upd ated the market, revealing that its shares remain suspended as it considers a non-binding offer for part or all of its key South Australian cheese and lactoferrin processing operations. Beston, which originally purchased a 26.5% stake in the then-biodynamic B-d. Farm Paris Creek before its ASX listing in 2015, has since narrowed its focus almost exclusively to dairy, exiting other agricultural investments.
However, despite this concentration, Beston has struggled financially, accumulating nearly $70 million in debt by March 2024 and reporting a negative cash flow of $3.4 million for the quarter. Earlier this year, the company’s primary lender, NAB, attempted to offload $55 million of Beston’s debt but found no buyers.
Beston shares were placed in a trading halt on July 1, followed by a suspension as the company pursued asset sales to secure the best possible outcome for its shareholders. Those who invested during the initial public offering at 35 cents per share are now facing a near-total loss, with shares last valued at 0.3 cents.
On Friday, Beston informed the ASX that it is progressing with due diligence involving a major international dairy company, which has made a non-binding indicative offer for Beston’s core dairy and dairy nutrition business. The discussions are ongoing and subject to nondisclosure agreements, and the offer is not yet in a form that can be accepted. Beston’s board believes that a successful transaction is crucial for the company’s financial viability.
Given the potential deal, Beston is currently unable to accurately assess the carrying value of its assets or appropriate impairment charges, delaying the filing of its full-year results. The company has se t a September 9 deadline for bids.
Maggie Beer Holdings, which acquired Paris Creek in 2017 for $34 million, including $30.5 million in cash and $3.5 million in shares, is now itself valued at approximately $23 million. The company’s shares dropped more than 9% on Monday, trading at 5.8 cents. Additionally, Maggie Beer impaired the goodwill of its hampers division, acquired in 2021 for $40 million, by $13.8 million.
These strategic moves by Beston and Maggie Beer reflect the pressures faced by smaller dairy companies in a challenging market environment, and the outcomes of these potential sales could reshape the landscape of the Australian dairy industry.
