US funds manager Hines targets home of Vegemite
The home of Vegemite is close to changing hands, with the Bega Cheese-owned factory in Port Melbourne where the famed yeast spread is made set to sell to US property group Hines.
The listed company is in talks with Hines to sell the facility for close to $150m in a structured deal that would keep a number of options on the table, including an early exit for the foods group.
Hines has been expanding its logistics empire and could be keen to get its hands on the site that may be redeveloped in coming years if Bega moves out.
The facility went on the block in May when Bega launched an expression of interest campaign for the sale and leaseback of the Port Melbourne property.
The factory, where Bega manufactures Vegemite and other products, is five kilometres from the Melbourne CBD, making it ideal for last-mile deliveries.
The sale was proposed to allow Bega to continue making Vegemite at the site under a long-term lease arrangement. This may remain in place but the buyer could structure the deal to allow early access to the site.
Bega is being advised by Colliers and Addisons on the potential sale and leaseback of the property and the company has said it would provide further details to the market if it identifies and progresses a suitable proposal. Colliers’ agents Gavin Bishop, Sean Thomson and Jack Kelliher are handling the marketing but declined to comment.
When delivering the company’s results last week, Bega executive chairman Barry Irvin said the company had managed supply chain and market disruptions created by the Covid-19 pandemic, flooding and associated transport challenges and the global impact of the war in Ukraine.
Bega chief executive Paul van Heerwaarden said the benefit of “increased consumer prices” had started to flow through this financial year, with the full impact to be felt in the 2024 financial year.
“We are pleased to end fiscal 2022 in a position of balance sheet strength which enables us to continue to support further growth, invest in brands, innovation, capital projects and importantly, our people,” he said.
Parts of the Bega facility were last year put on track to be heritage listed after receiving council backing. Melbourne City Council backed an expert review of the Fishermans Bend urban renewal precinct, which called for the site to be preserved because of its historical significance.
The Vegemite factory was noted for its significance, as the site where the product was first produced in 1923. It took some years to catch on with the public who were used to British product Marmite, but now more than 22 million jars of Vegemite spread are sold every year.
The site has a storeyed history. In 1943 hundreds of women were recruited to work at a new vegetable dehydration factory in Port Melbourne as part of the war effort. In 1952, the site was expanded to include a yeast factory.
Bega’s revenue topped $3bn in the last financial year and it generated net operating cash flow of $158m and cut back debt.
This article was first published on www.theaustralian.com.au.
