Synlait has announced its intention to sell Dairyworks, its domestic cheese products division, to pay down debt.
Investment banking firm Jarden has been retained to advise on the divestment of Dairyworks and Talbot Forest Cheese, a related consumer business unit.
Synlait bought Dairyworks in 2019-20 for $112 million and Talbot Forest earlier in 2019 for a price between $30m and $40m.
Production and sale of the Talbot Forest-branded products have continued but the Temuka site has been mothballed.
Dairyworks operates out of Christchurch and claims a substantial share of the New Zealand cheese market with its Rolling Meadow and Alpine brands in supermarkets.
It has strong competition in Fonterra Brands and Goodman Fielder with Meadowfresh and Puhoi Valley.
Synlait said it would focus on its ingredients, food service and advanced nutrition product categories with world-class capability at Dunsandel and Pōkeno.
“Dairyworks is an excellent business,” Synlait CEO Grant Watson said.
“It delivers cheese products to various channels under a portfolio of well-known household brands.
“Despite having extremely strong capability across consumer, brand, customer and procurement, Dairyworks is not core to Synlait’s diversified growth strategy and does not leverage our core right to win competencies.”
Dairyworks CEO Tom Carter said growth in exports is the next transition, which a new owner would help to realise.
Market analysts said the Dairyworks divestment intention was not a surprise because Synlait is undergoing a capital structure review while ruling out an equity capital raise.
Its share price has lost $2 during the past six months and rebounded slightly after the Dairyworks announcement to sit at around $1.60.
