Iconic fruit and vegetable manufacturer SPC has agreed to merge with the Original Juice Company in what is being heralded as a move to solidify manufacturing in Australia.
In an announcement to the Australian Stock Exchange (ASX) today, The Original Juice Company (OJC) said it had entered an agreement to acquire SPC and the powdered milk business, Nature One Dairy.
The transaction is subject to several conditions, including OJC shareholder approval.
SPC has been a mainstay of manufacturing in Victoria's Goulburn Valley for more than 100 years and is one of the largest producers of packaged fruit, baked beans, spaghetti and ready-made meals.
Nature One produces powdered milk products that are sold throughout Asia and Australia.
The ASX statement said the combined businesses are expected to deliver more than $400 million in revenue in the next financial year.
Hundreds of people work at SPC's Victorian processing facility. (ABC Rural: Rachel Carbonell)
Difficult time for manufacturer
The merger comes at an important time for SPC, which had been fighting a losing battle for shelf space to foreign, imported fruit.
In June, it slashed its peach and pear intake by 40 per cent because of declining demand for Australian-grown products and competition from cheaper imported fruit.
In October last year, SPC launched a capital-raising venture, urging Goulburn Valley residents to buy shares to help fund equipment upgrades needed to improve its global competitiveness.
Many shoppers are familiar with the SPC logo, seen on canned tomoates, fruit, spaghetti and baked beans. (Supplied)
OJC has a production facility at Mill Park in Melbourne and sources fruit from 45 growers in New South Wales.
Outgoing president of OJC, former Victorian premier Jeff Kennett, said it was imperative that Australian manufacturing was supported.
"The agriculture industry is a pillar of our national identity in Australia and the backbone of many regional towns across the country," he said in an ASX statement.
"We should be supporting businesses like OJC, SPC and NOD to continue to thrive in their mission to support local growers, employ Australians in our processing plants and produce iconic healthy products for consumers, both in Australia and abroad."
SPC revealed they were cutting canned peach and pear production earlier this year. (Emma Field )
SPC Chairman, Hussein Rifai, stated the company's goal was to create "better, healthier food for the future".
"Since acquiring SPC from Coca-Cola Amatil, our strategy has been to firmly establish ourselves as a leader in both the Australian and global markets," he said.
"Building a strong foundation in our home market is vital for sustainable growth and success."
The merger is being promoted as a win for all brands.
The ASX statement said SPC had "multiple unused spaces" at its Shepparton production facility that could materially increase OJC's production output.
Similarly, SPC's distribution centre will help NOD reduce production, storage and distribution costs.
The enhanced scale of operations from the three companies means OJC's current pro-forma revenues for the 2024 financial year would jump from $49 million to $366m, according to the statement.
It is understood that upon completion of the merger, Mr Rifai will be the chairman of the combined business while current SPC Manager Director Robert Lervasi will become the global managing director.
SPC chairman Hussein Rifai says the merger will shore up the future of the iconic brand. (Supplied: Taryn Silver)
Important industry for Shepparton region
Former Greater Shepparton City mayor Geoff Dobson told the Victorian Country Hour that the merged company must support Goulburn Valley growers.
"It [SPC] has always been a cornerstone of the Goulburn Valley," Mr Dobson said.
"As long as the new entity maintains that, I think the community will be happy with it."
Former Shepparton Mayor Geoff Dobson (ABC News)
Mr Dobson described SPC as an icon in the Shepparton region and said the merger could open new income streams for the local companies.
He said the local community drew confidence from the company when it was doing well.
"If SPC is firing or if SPC is moving well, the confidence of the community is based on that," Mr Dobson said.
"The main thing is that the product comes from the Goulburn Valley, that’s number one.
"I am not all that fussed about where the money comes from."
Michael Crisera from industry body Fruit Growers Victoria said the merger was positive news for a struggling industry.
Fruit Growers Victoria grower services manager Michael Crisera says the merger is a promising sign for the sector. (ABC Rural: Annie Brown)
"It's what we need to push forward, that these companies support and invest in Australian growers," he said.
"To be honest, we've had a few decisions made recently that have really put a dent in growers' confidence in SPC.
"But any combining of powers – as with SPC, OJC, and OND – is a positive which will hopefully help these companies compete with their international rivals."
The vote by shareholders to approve the merger will be held in November.