US: Dean Foods sells Portuguese, Spanish units

By Catherine Sleep & Ivan Castano | 9 August 2006

US dairy group Dean Foods has agreed to sell its operations in Portugal and Spain to Lactogal Productos Alimentares, a leading dairy producer in Portugal and the Iberian region.

The sale is expected to be completed by the end of the year, subject to Portuguese regulatory approvals.

Contacted by just-food, a company spokesman for Dean Foods' Leche Celta division in Spain declined to disclose the value of the deal.

Dean Foods is selling the company to concentrate on its core activities in the US. It has provisioned EUR46.4m (US$59.7m) for possible accounting losses related to the sale. "Dean Foods has invested a lot in Leche Celta in the past two years and some of those investments have not seen returns yet," the spokesman said.

He added that Dean Foods bought a factory in Avila, Spain and built a milk plant in Alpiarca, 75 kilometres from Lisbon, to develop Leche Celta's business.

Leche Celta is in good operating health, the spokesman said. In 2005, the company delivered operating profits of EUR3.2m on revenues of EUR274m, a result which "was up" compared to 2004, he added.

Leche Celta has five factories located in Avila, Cantabria, Galicia (two plants) and in Alpiarca.

In 2000, Suiza Foods bought 75% of Leche Celta for EUR45m. Then Suiza Foods bought Dean Foods for EUR2.5bn in 2001, whereupon Suiza changed its name to the Dean Foods Company.

Lactogal's sales were reported by Reuters to be EUR683.5m.

Companies: Dean