Dairy Crest to sell dairies to Müller for £80M

The sale covers 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 are the firm’s dairy facilities at: Severnside, Chadwell Heath, Foston and Hanworth plus about 70 depots.

Dairy Crest chief executive Mark Allen said the deal will 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,” ​said Allen. Watch Allen comment on the acquisition in the video interview, produced by the firm, at the end of this article.

‘A more sustainable UK dairy sector’​

Allen added that the firms will do all they can to minimise the uncertainty for Dairy Crest staff arising from the deal.

Müller said bringing the two dairy operations together will enhance the merged business’s ability to compete and will ensure customers received quality products at low prices. 

Its boss Ronald Kers said the deal will 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,”​ said Kers.

He said the acquisition will allow Müller to create a more competitive, sustainable, efficient and innovative dairy processor in the UK which will generate real benefits for customers, consumers, employees and suppliers.

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.

Competition authorities​

The sale is conditional on the approval of the competition authorities and Dairy Crest shareholders and is expected to take several months to complete. 

Meanwhile, Dairy Crest revealed pre-tax profit down by 3% at £21.3M, in results for the first half of 2015 financial year. Its food business reported operating profits of £29.5M in a performance in line with analysts’ expectations.

Profits in the spreads business was 15% up at £12.7M, while cheese was down by 4% year-on-year at £16.8M.

But the dairies division reported a loss of £4.4M, after a £7.5M property contribution from the sales of depots. Overall the dairies business lost £12M, reflecting lower cream realisations and the lag in lowering farmgate milk prices.