The UK’s Northern Foods has said its Convenience Foods subsidiary has agreed to sell its Minsterley fresh chilled dairy products business to Uniq Prepared Foods, a subsidiary of food group Uniq, for a cash consideration of £16.5m (US$29.3m), which will be used to reduce group debt.
During the financial year ended 31 March 2004 Minsterley made an operating loss of £3.8m on sales of £58.6m. Minsterley makes dairy desserts, yoghurt, fromage frais and cottage cheese, which are sold principally under the Marks & Spencer and Asda retailer brands. It also manufactures a range of branded dairy desserts under licence.
The Minsterley factory in Shropshire employs some 520 people who will transfer to Uniq. It is expected that the sale will be completed later this month.
Northern’s finance director Sean Christie said Minsterley’s losses arise from the reduction in turnover that followed its sale of the Ski and Munch Bunch brands to Nestlé UK in 2002.
Uniq said the acquisition would be earnings dilutive in the first year as steps are taken progressively to improve Minsterley’s operating results.
“The purchase provides Uniq with an opportunity to increase significantly the scope of its purchasing and supply chain initiatives and, with further investment, secure major cost and integration synergies. It is anticipated that these synergies, which are estimated at more than £10m a year before tax, will be delivered progressively from the second year of ownership to make it substantially earnings enhancing,” Uniq said.