Australia’s TasFoods has signed an agreement to purchase the milk processing assets and brands of The Betta Milk Co-Operative Society.

As part of the deal, TasFoods has agreed to pay approximately A$11.5m ($7.9m) funded from internal and external sources, including an A$8m ($5.5m) non-renounceable rights issue that has been fully underwritten at $0.12 per share.

TasFoods executive chairman Shane Noble said: “This is a transformational acquisition for TasFoods that will enable us to leverage our present resources and facilities. Betta Milk has excess production capacity presenting multiple avenues for growth within Tasmania, other states and export markets.

“TasFoods’ increased scale will allow us to grow our investment in premium Tasmanian food products and help us achieve our goal to become a more significant player in the Australian dairy market.”

“TasFoods’ increased scale will allow us to grow our investment in premium Tasmanian food products.”

Established in 1956, Betta Milk processes around ten million litres of milk each year and has market shares of 17% of Tasmanian fresh variant sales and 37% of branded sales.

Under the terms of the agreement, TasFoods will acquire Betta Milk’s recently upgraded export-accredited processing facility in Burnie, as well as distribution centres in Launceston and Hobart.

The acquisition is expected to complement TasFoods’ existing dairy brands, including Pyengana Dairy, Meander Valley Dairy and Robur Farm, as well as further expand its distribution network.

Completion of the deal is subject to final due diligence and approval by Betta Milk shareholders.

Noble further added: “We believe there are also opportunities in mainland and Asian markets to leverage our recently registered Van Diemen’s Land Dairy brand.

“We also confirm that we remain on track to report positive EBITDA from existing operations for the year to 31 December 2019.”