Canadian dairy heavyweight Saputo is reportedly among the interested parties seeking to buy Westland Milk Products, which is in the midst of a “capital structure review”.

Australian media reports suggest Toronto-listed Saputo, which bought Australian dairy co-op Murray Goulburn last year, is emerging as the most-likely candidate to acquire all or parts of Hokitika-based Westland Milk, New Zealand’s second-largest dairy cooperative. 

In December, Westland said it had drawn “indicative proposals” for its capital structure review from more than 25 parties. Earlier in the summer, the company said its review could include a merger or divestment.

At the time, Westland said options could include continuing with its current business model or introducing a “cornerstone investor” to provide new capital to fund growth. It had hired Macquarie Capital and DG Advisory to “consider potential capital and ownership options that will create a more sustainable capital structure and support a higher potential payout”.  

Westland had previously said it would not provide an update on the proceedings until March.

When approached by just-food for an update, company chairman Pete Morrison said in a statement: “Westland Milk Products has entered into strictly confidential discussions with a select number of interested parties. No comment will be made until the end of the process. As stipulated from the beginning of the process, the board intends to bring an option back to shareholders for their consideration and approval, if it believes it meets their objectives.”

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Separately, The Australian newspaper said, without disclosing the source of its information, that Saputo was only interested in acquiring parts of Australian food and drinks group Lion following previous murmurings the Canadian business was eyeing the dairy assets of that firm. 

In September, Lion revealed its owner, Japanese group Kirin Holdings, had launched a review of the Lion Dairy & Drinks unit. Lion then later confirmed the division, including brands such as Pura milk, Dare iced-coffee and South Cape cheese, was up for sale.

Saputo chairman and chief executive Lino Saputo Jr. followed up with comments on the Lion speculation in November by saying: “There might be parts of the business that we might be able to scoop up. Depending on where the region and where their plants are, we might have too much concentration, a little bit like what we did when we looked at the MG [Murray Goulburn] assets.” 

Saputo Jr made clear last year that further acquisitions were on the cards for 2019 following its purchases of Murray Goulburn and local peer Shepherd Gourmet. “We have the financial flexibility upward of three billion dollars,” the CEO said.