A deal that has returned Vegemite to Australian hands has delighted Dick Smith, the most vocal critic of the yeast spread's foreign ownership so much that he has pumped $250,000 into the product's new owner, Bega Cheese.
The ASX-listed dairy producer revealed it would buy Vegemite and a host of other Kraft products from the American giant Mondelez for $460 million on Thursday morning.
"We are buying an iconic brand in Vegemite," Bega executive chairman Barry Irvin said. "These iconic brands alongside the Bega brand are strong building blocks to enable Bega Cheese to become a great consumer goods business."
Entrepreneur and foreign investment critic Smith said it was fantastic and "wonderful for Australia" for the spread, which first went on sale in 1923, to be back in local hands as profits would now remain in Australia.
"I've wanted to buy Vegemite for over 20 years and they've never answered me, so I've had other well-known Australian businessmen write to them to see if they would sell it, and they've never gotten an answer," Mr Smith said.
"People are so addicted to it, so I'm sure it would have been a fantastic money spinner."
Instead, Mr Smith hatched a plan in 1999 to launch his own Australian-owned rival product. After 13 years tinkering with the recipe, Dick Smith Food's OzEmite went on sale in 2012.
While Bega is now a yeast spread competitor, Mr Smith said he bought "about a quarter of a million dollars' worth" of the dairy processor's shares on Thursday and would probably buy more.
He won't stop selling OzEmite however, even though its stated reason for existing is now largely void.
"OzEmite is gluten free: it's made from corn," Mr Smith said. "I don't like competing with another Aussie company but in this particular case we'll probably keep it because the gluten-free people want it."
Investors cheered the news of Bega's purchase, with shares up a hefty 15 per cent to $5.16, recouping part of the losses recorded last October when concerns over slow sales of its infant milk formula joint venture with Blackmores saw the shares dumped.
All 200 staff at the Port Melbourne site Bega is buying will be retained, including administration staff, at least initially, as Bega intends to operate the new business "as a separate platform", Mr Irvin said.
The sale also includes Kraft products like peanut butter and mayonnaise and Mac and Cheese. However ownership of these brands will transfer back to the US-controlled group at the end of the year. Mr Irvin said Bega would try to retain the right to use the Kraft brand for those products.
Bega will fund the aquisition through debt.
