UK chilled dairy food group Dairy Crest has offered £86.5m (US$135.2m) to acquire the St. Ivel spreads business from chilled convenience food group Uniq [formerly Unigate].

The brands up for grab include Utterly Butterly, St. Ivel Gold and Vitalite. The deal also includes the UK licence for Italy’s Carapelli brand of olive oil spreads, as well as a manufacturing facility in Liverpool.

St. Ivel spreads reported sales in the year to 31 March 2002 of £75.2m and an operating profit of £12.6m and, at that date, had net tangible assets of £19.6m. The acquisition will generate goodwill of approximately £65m, which will result in a tax deduction of £1m per annum. The business is highly cash generative and it is expected that the acquisition will enhance normalised earnings and will generate a return on investment in excess of Dairy Crest’s cost of capital, the company said in a statement to the media and investors.

Dairy Crest will also acquire an exclusive licence for the use of the St. Ivel brand in perpetuity for use across juice and all dairy categories, excluding yoghurts, dairy desserts and cottage cheese.

The acquisition is conditional on clearance being received from the Office of Fair Trading and is subject to approval by Uniq’s shareholders. Dairy Crest expects the transaction to be completed around mid November. On completion, an adjustment will be made to the consideration to reflect the level of working capital transferred. This adjustment is not expected to be material.

Although Dairy Crest said it expected the acquisition to boost earnings, its shares fell 11% on the news, reported Reuters, because the price was higher than the market had expected. The firm also said it expected operating profits for the first half to end September to be slightly below the same period last year.