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Canadian coop Agropur continues domestic dairy expansion

By Mark Astley+

15-Jul-2014

Canadian coop Agropur continues domestic dairy expansion

Canadian dairy cooperative Agropur has furthered its domestic expansion efforts - announcing two acquisition agreements in less than a week.

Agropur Cooperative, Canada's second largest dairy processor, announced yesterday that it has agreed to acquire the dairy manufacturing and distribution assets of New Brunswick-based Northumberland Dairy Cooperative.

Subject to the approval of Northumberland members and Canadian regulators, the deal will see Agropur acquire the cooperative's Miramichi processing plant in New Brunswick, its distribution centres, and its brands for an undisclosed fee.

The operations set to change hands manufacture and distribute products worth CAD$67m (US$62.3m, €50m), according to Agropur.

Yesterday's announced deal is the latest in a string of mergers and acquisitions sealed by Agropur, which is seeking to secure its position in the Canadian dairy sector.

"The dairy industry is increasingly competitive in Canada and around the world," said Robert Coallier, CEO, Agropur.

"The cooperative movement needs to consolidate in order to stay competitive and remain an important player in dairy processing. This agreement will help us maintain our position as an industry leader and enhance our ability to serve our customers coast to coast."

Growth strategy

Last week, Canada's second largest retailer Sobeys agreed to sell four dairy manufacturing facilities in Western Canada to Agropur.

Under the CAD$356m (US$331m, €244m) deal, also subject to regulatory approval, Agropur will acquire separate milk and ice cream plants in Edmonton, and milk processing facilities in Winnipeg and Burnaby.

It has also secured a license for the production and distribution of Sobeys' Lucerne brand milk and cream, and long-term agreements to supply Sobeys, Safeway, and IGA stores in Western Canada with milk yogurt, and ice cream.

The Sobeys deal, Agropur claimed last week, would confirm its "leadership position in the Canadian milk industry."

"This transaction fits perfectly with our growth strategy," said Coallier. 

"It will allow us to better serve our customers and consumers from coast to coast. Thanks to the business related to these assets and the renewal of certain contracts, the acquisition of the plants represents revenues totaling over $400 million and sees us accelerate our growth in the Canadian market," he said.