Saputo have completed the acquisition of Dairy Crest, which is in turn the owner of brands such as Cathedral City and Clover. The deal, worth £975 million, sees the Canadian dairy processor making the purchase at a value of £6.20 per ordinary share.
Entering the UK market
A spokesperson for Saputo said that the deal will allow them to 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”. This means that their international presence has grown by a considerable degree.
They added that: “Dairy Crest is an attractive platform which fits with the company’s growth strategy.”
This might be a huge understatement, as Dairy Crest have been having a fantastic few years. In the 12-month period leading up to the 31st May 2018, the company had reported revenues of about £456.8 million. This represented a total profit after tax of £149.5 million, including exceptional items which represented up to £98.9 million.
When looking at the six month period which ended on the 30th September 2018, the business saw revenues of around £224.9 million as well as profit after tax of £14.5 million. It’s clear that there is potential for the investment in this cheese processing firm to be paid off very rapidly, especially under the guiding hand of an umbrella company with a lot of experience in this field and international connections. They may be able to cut costs with their existing resources, as well as boosting sales in overseas markets.
There have been no announced plans to make changes to the staff at the company’s various sites, but should there be any available positions, you can keep an eye out for them here.
Positive forecasts
The mood is optimistic at both Saputo and Dairy Crest that this partnership could take both companies to new heights.
“The acquisition should enable Dairy Crest to benefit from Saputo’s global expertise and strong financial position to fulfil and accelerate its growth ambitions,” said chairman Stephen Alexander, back in February when the idea of the deal was first announced. “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.”
Since then, plans have obviously proceeded as intended, allowing the companies to benefit from a mutual future. We will have to keep a close eye on their progress, but the expectation is that the Dairy Crest brands will continue to make good revenue. This will particularly, perhaps, be the case for Cathedral City, which had only recently announced new product lines set to increase their market share if successful.
There have been plenty of acquisitions over the past couple of months, as it seems that something must be in the air in the food industry. Wessanen, the owner of Clipper Teas and Whole Earth, has recently accept a takeover bid from PAI Partners. The private equity firm joined the Delta Partners co-founder Charles Jobson to put together a deal which was worth around £737.2 million altogether (in Euros).
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