Argentinian milk producer Adecoagro has finalised a deal for the financially-embattled dairy cooperative Sancor.
The agreement sees Adecoagro take on the ownership of two production facilities and select brand names.
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The New York-listed firm confirmed the plants include the Chivilcoy site based in the province of Buenos Aires and another in the city of Morteros, within the province of Cordoba, according to a filing with the US Securities and Exchange Commission. The former facility is engaged in the production of liquid milk for the local market, while the other manufactures dry milk and cheese for export.
Adecoagro will also acquire the Sancor brands Las Tres Ninas and Angelita under the deal, which local media have put at being worth US$40m in total. “Both brand names are well recognised in Argentina and represent a solid commercialisation vehicle for retail consumer dairy products,” the filing stated.
It continued: “The acquisition will enable the company with the flexibility to sell into the export and domestic market, based on relative profitability with a view to generate attractive returns. At the same time, it will allow us to leverage and create synergies with our highly-efficient free-stall dairy production system.”
Argentinian media reports also suggested Adecoagro plans to invest as much as $15m in the plants following the agreement.
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By GlobalDataChief executive Mariano Bosch reportedly told one outlet that the investment plans will depend on how the market evolves but may be in the range of $10-15m.
The deal has been almost a year in the making. In March last year, Adecoagro submitted an investment proposal to form a business partnership with SanCor, which at the time was also reportedly in talks with New Zealand dairy co-op Fonterra. And the following month approval was given by Sancor’s members to proceed with a tie-up with Adecoagro, which is also involved in the grains and rice business.
