Saputo set to buy UK’s Dairy Crest for $1.27bn
The deal will be a cash acquisition by which Saputo will acquire the entire issued and to be issued ordinary share capital of Dairy Crest for £6.20 (US$8.11) per ordinary share, valuing Dairy Crest's existing issued and to be issued ordinary share capital at approximately £975m (US$1.27bn).
The purchase price will be financed through funds drawn on a new bank term loan facility entered into in connection with the transaction, which 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.
The board of directors of Dairy Crest said it intends to unanimously recommend to shareholders of Dairy Crest to vote in favor of the transaction.
Subject to the conditions, the transaction is expected to close in the second quarter of 2019.
‘Attractive platform’
Dairy Crest manufactures and markets cheese, butters, spreads and oils under 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 UK.
For the year ended March 31, 2018, Dairy Crest had revenues of approximately £456.8m (US$597.2m) and profit after tax for the period of approximately £149.5m (US$195.5m).
Saputo said Dairy Crest is an attractive platform that fits with Saputo's growth strategy.
Lino A. Saputo, Jr., chairman and CEO of Saputo Inc., said, “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.”
Recommendation
Stephen Alexander, chairman of Dairy Crest, said, “The board is unanimously recommending this all-cash offer by Saputo to buy Dairy Crest at an attractive premium, which represents compelling value for Dairy Crest shareholders.
“Saputo is one of the top ten dairy processors in the world. Both companies have built strong positions in the cheese sectors in their respective home markets.
“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.”
Alexander added, “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.”
Saputo was busy with acquisitions in 2018, with the takeover of F&A Dairy Products, in the US; Canadian company, Shepherd Gourmet; and Australia’s Murray Goulburn.
