Under the terms of the deal, shareholders will receive 620p cash for each Dairy Crest share. UK production is not expected to be affected, with Dairy Crest continuing to manufacture its range from existing facilities.
Stephen Alexander, chairman of Dairy Crest, said the deal would grow the UK business.
“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,” he said. “Dairy Crest is a leading UK dairy company and the proud manufacturer of Cathedral City, the largest UK cheese brand. 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.”
Commenting on the deal, Lino A. Saputo, Jr, chairman and chief executive of Saputo, said: “Dairy Crest is an attractive platform for Saputo and fits well within our growth strategy. We believe that, under Saputo’s 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.”
Who is Saputo?
Based in Montreal, Saputo produces, markets and distributes a wide array of high-quality dairy products, including cheese, fluid milk, extended shelf-life milk and cream products, cultured products and dairy ingredients.
The Saputo Group is one of the top ten dairy processors in the world, the largest cheese manufacturer and the leading fluid milk and cream processor in Canada, the top dairy processor in Australia and the second-largest in Argentina. In the US, the Saputo Group ranks among the top three cheese producers and is one of the largest producers of extended shelf-life and cultured dairy products.
It has 15,000 employees across 62 plants and sells in more than 40 countries. Its consolidated revenue for the 12 months to 31 March 2018 was CDN$11.5bn (£6.7bn).
Saputo said it expected Dairy Crest to be managed and run by the current senior management and employees and that, given its lack of presence in the UK, it foresaw “only limited rationalisation of employee roles following the acquisition, mainly targeted at corporate and support functions, notably those related to Dairy Crest’s status as a public listed company”.
Unite national officer for the food industry Sue Pollard said: “Unite is cautiously optimistic that Saputo is seeking to develop Dairy Crest’s operation in the UK over the long-term.
“Unite is now seeking an urgent meeting with the senior management at Saputo to receive detailed information about the company’s plans and secure assurances about employment levels and a commitment to maintaining all existing plants.”