Canadian Dairy Giant to Acquire Dairy Crest For £975 Million
Canada-based Saputo Group, which is one of the top ten dairy processors in the world, has made a recommended all cash offer of £975 million to acquire Dairy Crest, the UK dairy business. The acquisition will allow Saputo Group to increase its international presence and enter the UK market by acquiring and investing in a well-established and successful industry player with a solid asset base and an experienced management team. Saputo Group does not currently have any operations in Europe and sees Dairy Crest as an attractive platform for growth in the UK.
Headquartered in Montreal, Saputo Group is the largest cheese manufacturer and the leading fluid milk and cream processor in Canada, the top dairy processor in Australia and the second largest in Argentina. In the United States, the Saputo Group ranks among the top three cheese producers and is one of the largest producers of extended shelf-life and cultured dairy products.
Employing approximately 15,000 people, Saputo Group operates 62 plants and sells its products in more than 40 countries. For the twelve months ended 31 March 2018, Saputo’s consolidated revenues amounted to C$11.543 billion (£6.706 billion) and its net earnings amounted to C$853 million (£495 million).
Dairy Crest has transformed itself in recent years from a supply-driven commoditised business to a leading UK manufacturer of foods and added-value ingredients. Pivotal to this transformation was the sale, executed by Dairy Crest’s current management team, of its Dairies operation to Müller in 2015.
Dairy Crest manufactures and markets a portfolio of market-leading brands including Cathedral City cheese, Clover dairy spread, Country Life butter and Frylight cooking spray. It also produces ingredients for the high growth global infant formula market – demineralised whey powder, a by-product from the cheese-making process, and galacto-oligosaccharides (GOS), a lactose-based prebiotic which helps to improve gut health.
During the last financial year, Dairy Crest raised just under £70 million through a share placement to increase cheese production capacity at its creamery in Davidstow, Cornwall. The proceeds are also being used to enable the site to become self-sufficient in the supply of water and to improve energy resilience, thereby reducing its environmental impact.
Dairy Crest employs approximately 1,100 people in seven locations in the United Kingdom – five operating sites, an Innovation Centre on the campus of Harper Adams University and a Head Office situated in the outskirts of London.
Lino A. Saputo, Jr, chairman and chief executive of Saputo.
For the twelve months ended 31 March 2018, Dairy Crest reported revenue of approximately £457 million, profit before tax (including exceptional items) of approximately £179 million and adjusted profit before tax of approximately £62 million.
Lino A. Saputo, Jr, chairman and chief executive of Saputo Inc, says: “Dairy Crest is an attractive platform for Saputo and fits well within our growth strategy. We believe that under Saputo ownership, Dairy Crest will be able to accelerate its long-term growth and business development potential and provide benefits to Dairy Crest’s employees and stakeholders. This recommended offer represents a compelling opportunity for Dairy Crest Shareholders, providing immediate value certainty.”
Stephen Alexander, chairman of Dairy Crest, comments: “The Acquisition should enable Dairy Crest to benefit from Saputo’s global expertise and strong financial position to fulfil and accelerate its growth ambitions. The businesses have strong shared values and the board is confident that Saputo’s plans to invest in and grow the Dairy Crest business mean the proposed transaction is positive for all its stakeholders.
“The price premium Saputo is offering reflects Dairy Crest’s portfolio of market-leading brands, its manufacturing and innovation capabilities as well as its experienced management team, who will continue to run the business under Saputo’s ownership. It is for these reasons that the board is unanimously recommending this transaction to Dairy Crest shareholders.”
