Canadian dairy giant Saputo has said it is still looking for acquisition opportunities despite just closing the CAD1.7bn (US$1.27bn) deal to buy UK peer Dairy Crest.

But reports in the Canadian media linking Saputo with a bid for the US’ largest dairy company Dean Foods may be wide of the mark with the Canadian firm stressing it is interested in targets with added-value products rather than those with a business model based on fluid milk sales.

Speaking to analysts in a post-deal conference call, Saputo’s chief executive officer Lino Saputo said: “There are still opportunities out there and our pipeline does remain quite healthy with respect to new targets and new acquisitions.

“Over the course of the last two years, we have put ourselves in an incredible position where we have acquired assets over the short, medium and long term that will create value for us.

“But that doesn’t mean we will stop here. We will continue to look for those opportunities that will either be transformational for us or strong tuck in businesses.”

Seeking to outline the company’s acquisition strategy more specifically, Mr Saputo said: “We will continue to be extremely choosy about the assets we are looking at.

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By GlobalData

“We will not acquire anything just because it is available for sale, only if they are assets that will add value for us. We want to be in value-added categories. Fluid milk is not on our radar screen in terms of acquisition targets.”

Saputo said the acquisition of Dairy Crest – which has a brand portfolio including Cathedral City, Clover and Country Life – is a good fit in added-value terms.

“It is a transformational acquisition that provides us with an opportunity to be in a new geography with some strong brands,” he said.

Saputo said it will be spending CAD85m on a three-year project to increase capacity of cheese and by-products at Dairy Crest.

He said Brexit – the UK’s departure from the European Union – was not an issue when considering the Dairy Crest acquisition as 100% of its milk is bought in the UK and 97% of its products are sold in its domestic market.

But he added Saputo saw an opportunity to sell Dairy Crest’s “high-end cheddar” and other products in some of the 40 international markets in which it operates.

The Dairy Crest acquisition follows Saputo buying Australian dairy business Murray Goulburn in October 2017 for CAD1.29bn.

just-food analysis from March 2019: Saputo marks European return with move for likely target Dairy Crest