Photographer: Bernhard Richter/Getty Images

Vegemite Heads Back to Australia in $345 Million Bega Deal

Updated on
  • Bega Cheese to acquire global trademark rights for Vegemite
  • Cheesemaker buys Mondelez International regional grocery unit

Vegemite, the iconic yeast spread found in almost every kitchen Down Under, is back in Australian hands as part of a record A$460 million ($345 million) acquisition by Bega Cheese Ltd.

Bega, best known for its cheddar cheese, is buying a suite of brands including Zoosh salad dressings and beef drink Bonox from Illinois-based Mondelez International Inc., it said Thursday in a statement. The debt-funded deal will transform dairy producer Bega into a consumer-goods company. Its shares jumped the most in more than a year.

Vegemite was first made locally by the Fred Walker Co. in 1922, which later merged with Mondelez’s parent Kraft.

While the sticky, salty, love-it-or-hate-it spread is unknown to most Americans, every Australian adult typically buys a jar each year, according to Bega. The acquisition of Vegemite and the other brands hands Bega almost one third of Australia’s A$550 million spreads market.

“This was a rare opportunity,” Bega Chairman Barry Irvin told investors on a conference call. “Vegemite doesn’t often change hands. This does add diversification to Bega Cheese.”

Bega stock rose as much as 13 percent to A$5.08 at 11:09 a.m in Sydney, the biggest gain since December 2015. The rally lifted the company’s market value to A$775 million.

Volatile Prices

Irvin, a fifth-generation dairy farmer, said in an interview last year that he aimed to break a history of meager returns at Bega, Australia’s leading cheesemaker. Volatile commodity prices had made it difficult to make money manufacturing simple food ingredients such as skimmed milk powder.

Bega is also acquiring the license to sell Kraft Peanut Butter and processed cheese. That license expires in December 2017. Bega didn’t specify its plans for those products beyond this year but said it has “a number of brand transition options.”

Bega expects the newly acquired assets to generate annual revenue of about A$310 million and earnings before interest, tax, depreciation and amortization of as much as A$45 million.

Mondelez is pruning its sprawling food portfolio to focus on snack products Cadbury Dairy Milk chocolate and Oreos. Mondelez will retain the Philadelphia cream-cheese business.

Mondelez was established to take advantage of faster-growing emerging markets and generates more than 70 percent of its revenue outside the U.S. But with the strong dollar weighing down sales, the American company has been more focused on its home market. It attempted to acquire Hershey Co. last year in a failed deal that would have turned it into the world’s biggest candy company.

— With assistance by Craig Giammona, and Nick Turner

(Adds comment from Bega chairman in fifth paragraph.)
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