Canada's Saputo considers milk plant sale to appease Australian regulator

SYDNEY (Reuters) - Canada's Saputo Inc said on Monday it is discussing plans to sell a milk plant in Victoria state to address concerns from Australia's competition watchdog about its buyout of Murray Goulburn Co-operative.

Canada's biggest cheesemaker last year agreed to pay up to A$490 million ($380 million) for debt-ridden Murray Goulburn, but the Australian Competition and Consumer Commission (ACCC) said the deal may leave some Victorian farmers little choice when selling their milk.

"Saputo has initiated discussions with the ACCC in respect of a divestment plan for the Koroit dairy plant in order to address the ACCC concerns and to obtain the ACCC clearance," Saputo said in an emailed statement.

Murray Goulburn said in a statement it would "work closely with Saputo and the ACCC to seek approval of the asset sale".

Victoria's Weekly Times newspaper last week reported rival Bega Cheese Ltd, once a suitor for Murray Goulburn, was among firms interested in the Koroit plant, citing remarks from its Chairman Barry Irvin.

Bega did not immediately respond to a request for comment.

Murray Goulburn has been seeking a financial lifeline since 2016 when plans to sell high-margin products like infant formula in China led it to overpay for source milk, while sales fell far below expectations.

The deal would leave Saputo processing nearly half of Australia's milk output under the current deal, according to industry body Dairy Australia.

Murray Goulburn shares were up 1 percent at 84 Australian cents in morning trading, well below their A$2.10 issue price. The broader market was down 0.3 percent.

($1 = 1.2897 Australian dollars)

(Reporting by Byron Kaye and Tom Westbrook; Editing by Stephen Coates)