Saputo, the Canada-based dairy giant, has snapped up part of US firm Southeast Milk.
The deal, struck for an undisclosed sum, sees Saputo take on Southeast Milk’s interests in extended shelf-life dairy products. Saputo will acquire a factory located in Plant City in Florida.
The division generated revenue of CAD59m (US$74.5m) in the year to the end of June. It employs 66 staff.
Saputo said the new assets would “complement” its own dairy foods operations in the US. The company manufactures a range of dairy products in the US through two units – cheese and dairy foods. Its dairy foods unit markets products including aerosol-whipped toppings, iced coffee and cottage cheese.
TD Securities analyst Michael van Aelst described the deal as a “modest tuck-under acquisition” for Saputo. “We believe Saputo Dairy Foods has reasonable growth prospects but is operating near full capacity. We believe that Southeast Milk’s Sunshine State Dairy Farms fluid milk operations, which is in the process of being shuttered, was located in the same facility as the extended shelf-life business that Saputo is acquiring. So while we do not know if the extended shelf-life production has excess capacity at the moment, the plant now likely has excess space to add capacity and ease some of the near-term capacity constraints at Saputo Dairy Foods,” he said.
In the year to the end of March, Saputo’s US business generated revenue of CAD5.81bn, up 0.4% on the previous 12 months. It reported an adjusted EBITDA from the division of CAD734.2m, an increase of 1.2% on a year earlier.