Australian competition watchdog flags concerns about Saputo-Murray Goulburn deal
(Adds background, MG statement and share movement)
March 1 (Reuters) - Australia's competition watchdog on Thursday raised concerns about Saputo Inc's proposed buy-out of dairy firm Murray Goulburn Co-operative relating to reduced competition for farmers' milk in one area of Victoria state.
"[The concerns] are solely in relation to Murray Goulburn's Koroit dairy plant in western Victoria, in particular the impact the acquisition will have on competition for farmers' milk in the area," the Australian Competition & Consumer Commission said in statement.
Canada's biggest cheesemaker Saputo offered to pay up to $490 million in October for debt-ridden Murray Goulburn.
The regulator said Saputo's Allansford plant and Murray Goulburn's Koroit plant would have over two thirds of the raw milk processing capacity in south-west Victoria if the deal goes through.
Saputo and Fonterra Co-Operative Group, the only other major competitor with a processing plant in the region, would be more likely to offer lower prices to farmers, it said.
"We are concerned this transaction would ultimately lead to lower prices being paid to dairy farmers in the region."
The regulator said it would seek responses from the concerned parties on the deal by March 13.
Murray Goulburn said in a statement it would co-operate with ACCC to address its concerns, and hold a shareholder meeting soon after it achieved more clarity on the regulator's process.
Shares of Murray Goulburn's funding vehicle MG Unit Trust fell 5.3 percent while the broader market was nearly 1 percent lower. ($1 = 1.2888 Australian dollars) (Reporting by Chris Thomas in Bengaluru; editing by Richard Pullin)
