Canada's leading dairy company Saputo has announced its agreement to pay €860m to acquire Murray Goulburn co-op, the largest milk processor in Australia. The transaction has yet to be approved by Murray Goulburn's shareholders in the first half of next year.

Saputo said the merger would reinforce its existing presence in Australia. The deal would see Murray Goulburn's 2,600 members move from the co-op model to a plc listed on the Toronto stock exchange.

The deal includes a number of conditions including back-dated milk price top-ups for suppliers from July 2017 and payment of a €0.49 dividend per share after completion.

'Unanimous' board support

"The board’s unanimous opinion is that the Saputo transaction represents an outcome which is in the best interests of shareholders and suppliers and one which is superior to alternatives, particularly given the continuing constraints," Murray Goulburn chair John Spark told his co-op's AGM on Friday. New Zealand's Fonterra was another bidder for troubled Murray Goulburn, which had to close plants and lay off staff during the past few years' global dairy crash and has faced member anger over milk prices. Chinese-based Yili was also seen as a contender.

Farmer and board member Craid Dwyer told the Murray Goulburn AGM that selling the co-op was the only option left after failing to secure a government rescue package. "I signed up to fix it, not sell it. However, reality has prevailed and forced our hand," he said, acknowledging criticism from fellow co-op members.

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