Dairy Crest, the UK company behind brands like Cathedral City cheese and Clover butter, has acquired cooking oil and salad dressings maker MH Foods.
The GBP13m (US$21m) deal, announced today (19 July), gives Dairy Crest a business that makes “one-calorie” spray cooking oils under the Fry Light brand.
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Anthony Fry, Dairy Crest’s chairman, said MH Foods had “a good history of innovation over many years, the leading brand in its sector and fits well with our spreads business”.
Fry added: “We believe the acquisition will allow us to build on our strong portfolio of lighter brands.”
Shore Capital analyst Clive Black said the deal “could show some intent” as to where Dairy Crest could take its business and he estimated the “bolt-on acquisition” could add GBP1-1.5m in profits “over time”.
The annnouncement of the acquisition came as Dairy Crest said trading in the first quarter of its financial year was “in line with expectations”.
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By GlobalDataSales of Dairy Crest’s five key brands – which also include St Hubert Omega 3 cheese and Country Life butter – were up 5%.
Shore Capital’s Black said that food inflation meant the 5% increase reflected “moderately negative volumes”.
Black also estimated that around 70% of Dairy Crest’s cheese and 55-60% of its spreads were being sold on promotion, levels that were “broadly unchanged” from the year before.
“We believe that Dairy Crest’s management is correct to maintain the support of its brands in terms of share & market position in these challenging times,” he said.
The company’s dairies unit has benefited from “higher than anticipated” cream prices but it said competiton in retail milk had meant sales from “residential” milk sales had been lower.
