Canadian dairy firm Saputo and US food group Michael Foods are understood to be vying to acquire the Morningstar business of Dean Foods.
According to Reuters, the two companies have emerged as front-runners in the auction process, which may fetch between $1bn to $1.5bn for the producer of creams and cultured dairy products for foodservice and own-label firms.
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Other bidders are said to including Mexican dairy company Grupo Lala and private-equity firm Apollo Global Management, the publication reported.
Dean Foods said it was considering the sale of its Morningstar business in September and at the time said: “The company has not yet identified a buyer for Morningstar, but believes the business possesses an attractive portfolio in a growing marketplace and a top-notch management team. The company only intends to sell the Morningstar business if it can do so in a transaction that maximises shareholder value and helps ensure the future success of the business.”
TD Securities analyst Michael Van Aelst, who covers Saputo, said he had suspected the Canadian firm was interested in the assets.
“At first glance, one might think that Morningstar is not as tight a fit as cheese assets. However, keep in mind that Saputo is familiar with most of the products – Saputo sells many of them in Canada – and these products would be complementary in its US foodservice distribution.
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By GlobalData“Currently, Saputo’s US foodservice business is geared more towards the pizzerias – an acquisition of Morningstar could open doors to other foodservice customers, leading to cross-selling opportunities.”
Dean Foods spun off its WhiteWave unit in an IPO last month. It still owns a majority stake in the company, which markets brands including Alpro.
