Canadian headquartered dairy giant Saputo Inc. has reached an agreement to acquire UK dairy group Dairy Crest Group plc for approximately £975 million (approximately US$1.27bn). The board of directors of Dairy Crest intends to unanimously recommend to shareholders of Dairy Crest to vote in favor of the Transaction.
Headquartered in the United Kingdom, Dairy Crest is a large dairy company which manufactures and markets cheese, butters, spreads and oils under leading British brands, such as Cathedral City, Clover, Country Life and Frylight, and value-added dairy ingredients. Dairy Crest employs approximately 1,100 people in seven locations across the United Kingdom, including a creamery in Davidstow, Cornwall.
Saputo is one of the top 10 largest dairy companies in the world, and has made 30 acquisitions since 1997, but it does not currently have any operations in the UK. The Montréal-based company is listed in Toronto but the Saputo family’s investment vehicle still holds more than 30 percent of its shares.
For the year ended March 31, 2018, Dairy Crest had revenues of approximately £456.8 million (approximately CDN $786.3 million) and profit after tax for the period of approximately £149.5 million (approximately CDN $257.3 million) (which includes exceptional items representing approximately £98.9 million (approximately CDN $170.2 million)). For the six months ended September 30, 2018, Dairy Crest had revenues of approximately £224.9 million (approximately CDN $387.1 million) and profit after tax for the period of approximately £14.5 million (approximately CDN $25.0 million) (which includes exceptional items representing approximately £(4.0) million (approximately CDN $(6.9) million)).
The Transaction would enable Saputo to expand 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. Dairy Crest is an attractive platform which fits with Saputo's growth strategy.
The Purchase Price will be financed through funds drawn on a new bank term loan facility entered into in connection with the Transaction. It is currently intended that the Transaction will be implemented by way of a Court-sanctioned scheme of arrangement under the UK Companies Act 2006. The Transaction is subject to approval by the shareholders of Dairy Crest, the Court's sanction of the scheme of arrangement as well as other conditions customary for this type of transaction. Subject to the foregoing, the Transaction is expected to close in the second quarter of calendar year 2019. Saputo has received irrevocable undertakings to vote, or procure the vote, in favor of the Transaction from all of the directors of Dairy Crest who hold shares in Dairy Crest.
