Dairy Crest sale referred to competition authority

By Michael Stones

- Last updated on GMT

Dairy Crest's £80M dairy deal is to be reviewed by the competition authority
Dairy Crest's £80M dairy deal is to be reviewed by the competition authority

Related tags Dairy crest Milk

Dairy Crest’s plan to sell its dairies to Müller UK & Ireland is to be probed by the UK Competition and Markets Authority (CMA), after the £80M deal was referred by the EU.

The transaction remains on track, after receiving the approval of Dairy Crest shareholders, claimed its chief executive Mark Allen in a statement to the London Stock Exchange today (March 26).

“This transaction will be a positive development for both Dairy Crest and the UK dairy industry as a whole, delivering economies of scale that will help to create a more sustainable UK dairy sector that is better placed to compete on the global stage,”​ said Allen.

‘We welcome this referral’

“It has always been our preference for the transaction to be reviewed in the UK, so we welcome this referral back to the CMA as a positive step. We will work with Müller and the CMA to progress the merger review as quickly as possible.”

The announcement followed what Dairy Crest called “constructive talks”​ with the European Commission.

Dairy Crest revealed its plan to sell the loss-­making dairies to Müller on November 6 2014, warning the deal could take several months to complete and raising the possibility of a CMA investigation.

The sale covered Dairy Crest’s fresh liquid milk, flavoured milk – including the FRijj brand – bulk and potted cream, bulk butter and milk powder businesses. Also included in the deal were the firm’s dairy facilities at: Severnside, Chadwell Heath, Foston and Hanworth plus about 70 depots.

Plus about 70 depots

Speaking last November Allen said the deal would allow Dairy Crest to focus on growing its branded cheese and spreads business, while delivering additional added value sales through its whey investment. “The combination of our dairies operations with those of Müller Wiseman Dairies will create efficiencies and economies​ of scale that will help to create a more sustainable UK dairy sector that is better placed to compete on the global stage,”​ he said.

Müller boss Ronald Kers said the deal would introduce much­ needed stability into the liquid milk market. “We are concerned that the dynamics of the UK fresh milk market are unsustainable for dairy processors in the mid- to long-term and this acquisition will allow us to reduce our costs, increase our efficiencies and invest in the future,”​ he said.

Müller operates nine dairies and 10 depots nationwide. It employs nearly 6,000 people across four business units: Müller Dairy, Müller Wiseman Dairies, Müller Minsterley and TM Telford.

Meanwhile, Dairy Crest will issue preliminary results for the year ending March 31 2015 on May 21.

Related topics Dairy Dairy-based ingredients

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