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Saputo completes $1.45bn Morningstar acquisition

By Mark Astley , 04-Jan-2013

Saputo has completed its $1.45bn acquisition of Dean Foods’ Morningstar dairy division – a move the Canadian dairy giant hopes will help to expand its US manufacturing and distribution footprint.

The deal, which has been financed through a $1.2bn bank loan and $250m cash, will see Saputo adopt Morningstar’s portfolio of private label and owned-brand dairy and non-dairy extended shelf life products such as whipping cream, aerosol whipped toppings, value-added milk, and cottage cheese.

The Morningstar business has approximately 2,000 employees and operates 10 manufacturing facilities across nine US states.

The combined business will boast approximately 12,000 employees, 57 manufacturing facilities in five countries, and combined annual revenue of around CDN$8.6bn ($8.6bn).

According to Quebec-based Saputo, the acquisition will expand the group’s dairy offering in the US – a market that represents a “big opportunity for growth.”

Expanded US footprint

“Saputo completed today the transaction announced on December 3 2012 and acquired Morningstar Foods, LLC, a subsidiary of Dean Foods Company,” said a statement from Saputo.

“The acquisition of Morningstar complements the activities of the Saputo Dairy Products Division (USA). Through this acquisition, Saputo Inc. will benefit from Morningstar’s national manufacturing and distribution footprint and will optimise coast-to-coast service.”

“This transaction expands product offering to customers in the United States and broadens the range of Saputo’s future acquisition opportunities,” the statement added.

When the proposed takeover was first announced in early December 2012, Saputo stated that the deal would complement the activities of its existing US Dairy Products Division.

Speaking with DairyReporter.com following its initial announcement, Saputo spokesperson Sandy Vassiadis added that the takeover also signified a move away from the Canadian dairy market, where there is “not much room” for growth.

Reduce debt

Through the transaction, Dean Foods expects to realise around $887m in proceeds – cash it intends to use to reduce its current debts.

“The Company plans to use all net proceeds toward fully retiring its remaining senior secured term debt, significantly lowering its leverage and increasing its financial flexibility,” said Dean Foods in an statement.

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