Dairy supply company Australian Consolidated Milk (ACM) has completed a divestiture of its 50% interest in Pactum Dairy Group (PDG) to Freedom Foods Group for A$50.7m ($38m).

Freedom Foods has provided approximately A$50m ($37.8m) in cash along with an issue of 168,538 shares in Freedom Foods at an issue price of A$4.45 ($3.36) per share.

Established as a joint venture between Pactum Australia and Australian Consolidated Milk (ACM), PDG started operations at Shepparton in April 2014.

PDG provides new ultra-high temperature processing (UHT) dairy milk capability to meet Freedom Foods' own branded requirements and for third-party customers in domestic and export markets. It also offers a material opportunity to improve exposure to growing demand from China and South East Asia for high-quality and safe dairy products.

"The firm intends to also further invest in, expand, and utilise the UHT packaging capabilities installed at Shepparton."

PDG has increased its capacity over the last year to meet increasing demands, with plans for additional processing capability and upgrades to downstream packaging this year.

The firm intends to also further invest in, expand, and utilise the UHT packaging capabilities installed at Shepparton to process and package value-added milk derivatives such as cream and drinking yoghurt.

It is expected that the development of a specialised nutritionals platform at Shepparton during 2017/2018, along with this increase in capabilities, will provide protein standardisation and the ability to separate milk into industrial-grade pure protein components.

The components produced will be used in Freedom Foods branded products and for sale to strategic customers.