Lactalis has entered a “definitive” agreement to acquire the UK business of Canadian peer Saputo in the French dairy giant’s fourth deal in two months.
While the privately-owned company did not reveal the purchase price in a statement today (14 August), Saputo tagged the transaction at around £988m ($1.33bn).
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The deal is expected to close by the end of the first quarter next year, subject to regulatory approval, Toronto-listed Saputo added.
Lactalis said in its own announcement that Saputo UK, which generated revenue in its latest financial year of £800m, comes with five production facilities, along with a host of cheese brands such as Cathedral City and Davidstow.
The sites are located in Hawes (Yorkshire), Davidstow (Cornwall), Nuneaton (Warwickshire), Kirkby (Merseyside) and the Isle of Bute (Scotland), employing around 1,300 people, Lactalis said.
Also part of the deal are the brands Wensleydale Creamery cheeses, including the geographic origin protected Yorkshire Wensleydale, along with Country Life butter and the Clover and Utterly Butterly spreads.
Lactalis chairman Emmanuel Besnier said: “This acquisition marks a key milestone in Lactalis’ development in the United Kingdom. By welcoming famous brands and recognised expertise into the group, we are strengthening our position in the UK market and reaffirming our commitment to providing consumers with high-quality dairy products.”
In June, Lactalis swooped for another UK dairy business Protein Works in what the French group said “marks a new step” in its strategy.
Financial terms of that deal were not disclosed, although Lactalis said Protein Works generates annual revenue of around €65m ($75.6m).
More recently, Lactalis said in July it was poised to strike another deal on its home turf with Triballat, a business that posted revenues of €365m last year.
The same month, Lactalis inked an agreement for select cheese assets owned by another Canadian cooperative Agropur, including the brands Oka, Monsieur Gustav and L’Extra, along with the Oka and Saint Hyacinthe production facilities.
More significantly, Lactalis won the bid last year for Fonterra, the dairy co-op in New Zealand, for a price tag of NZ$3.8bn (then $2.2bn).
Saputo UK supplies retail and foodservice customers, with the UK accounting for 94% of sales and the rest in Europe, the Asia-Pacific and North America.
Carl Colizza, the group president and CEO of Saputo, said: “Today’s announcement reflects a disciplined step to refine our global footprint and sharpen our focus on platforms where Saputo competes from a position of strength.
“The value to be realised recognises the expertise of the UK team, the quality of the operations, and the market position of these leading brands. This transaction reinforces our strategic focus and enhances our financial flexibility as we continue to create long-term shareholder value through disciplined capital allocation.”
Saputo suggested some of the capital raised from the sale would be put to work in “organic investments and capital projects, and strategic acquisitions”.
For Saputo, the disposal of the UK business is the latest among a number of divestments.
In February, the company sold an 80% stake in its Argentina dairy business to Peru-based Grupo Gloria, keeping the remaining 20% interest.
Saputo got rid of its King Island Dairy business in Australia last year, while the group has also consolidated its production network.
Nonetheless, Saputo was said to be among the parties interested in buying Fonterra’s consumer-facing dairy operations before Lactalis stepped in to acquire the business.
