SA dairy deal sours with Thai importer
A proposed long-term agreement between Beston Global Foods and KCG Corporation has stalled.
Beston Global Foods' mozzarella production line at its Jervois factory. Picture: Walter Bulyga.
Dairy giant Beston Global Foods announced in a 2022 ASX Release at the end of August that it won’t sign a contract with KCG Corporation (KCG) in Thailand due to several unresolved matters during the discussions surrounding the partnership.
Both companies had entered a Memorandum of Understanding (MOU) in June, where Beston would sell 103.63 million shares at a price of 9.65 cents per share to KCG, netting an investment of $10m.
KCG, being one of Thailand’s top food importers, would then act as representative and exclusive distributor for Beston products in Thailand.
Beston, which ranked 76 on InDaily’s South Australian Business Index last year, also produces meat, seafood, artisan fine foods and canned goods.
The proposed agreement with KCG would see Beston’s development of products for Thailand and other ASEAN countries, which would accelerate the South Australian dairy company’s expansion across Southeast Asia.
Beston’s shares saw a 20 per cent jump in June after the announcement.
The target date of the transaction was the end of August after both companies had completed their due diligence investigations over the two-month period following the MOU.
Beston CEO Fabrizio Jorge visited Bangkok on 4 July while KCG representatives visited Adelaide on from 19 to 21 July.
An update released by Beston on 5 August noted that neither company found any issues of concern during these visits that would prevent the partnership from going ahead.
Beston said in the ASX release that the issues were directly related to the terms and conditions of the supply agreement between the two companies.
“Until such time these matters can be resolved, BFC (Beston) has advised KCG that it has withdrawn its offer, under the terms of the MOU, to make a strategic placement of shares to KCG,” the release stated.
“The management teams of KCG and BFC will continue to focus on the terms and conditions of the Supply Agreement.”
Beston added that the two companies acknowledge that the agreement should not be rushed to ensure the resilience and success of the contract.
According to the ASX release, Beston was significantly impacted by COVID-related events such as significant supply-chain costs and excess demand for its products in the global food markets, which affected their decision as they want to ensure that any supply agreement the company enters is not disadvantageous to Beston and its shareholders.
Beston’s shares are still trading 3 per cent higher, at around 6 cents, than before it entered the MOU, which should secure the company’s place in InDaily’s Top 100 index.
The eighth edition of the 2022 South Australian Business Index will be revealed on 29 September at the Adelaide Convention Centre, with a keynote address by Brett Woods, the President of Midstream Infrastructure and Clean Fuels Division at Santos.
