GENETICS Australia says shareholders will benefit from the sale of its retail and services businesses.

GA sold these operations in Gippsland to Herd Improvement Co-operative yesterday and its Western District operations to Northern Herd Development Co-operative.

It said the sales would achieve benefits similar to a proposed merger with HICO and provide a "necessary rationalisation of the herd improvement sector".

Genetics Australia chairman Ross Gordon said a merger between HICO and GA was not off the table, but the costs and time involved, especially in the tough dairying climate, forced the co-operatives to look at another path to rationalisation.

"We had to cut some serious cost down," Mr Gordon said.

"What we were doing with the merger would take quite a bit more money ... and there wasn't any guarantee we would get it over the line and then meet the thresholds (for tax).

"There was a potential $100,000 bill for capital gains tax and there is not that sort of money in the industry ... to give away."

The move ensures a lab to test herd recording results remains in each Victorian dairy region, while GA will return to its original business of production, import and marketing of semen and related products.

"It's a good win for shareholders, they still get choices and there will be a lab in each region," Mr Gordon said.

"It's consolidation of the herd improvement industry with the two key co-operatives."

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Genetics Australia sells off divisions

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