Saputo to Buy U.K. Cheese Maker Dairy Crest for $1.3 Billion
(Bloomberg) -- Saputo Inc., Canada’s biggest milk processor, agreed to buy the U.K.’s Dairy Crest Group Plc for 975 million pounds ($1.3 billion), gaining a foothold in Europe just months after snapping up Australia’s biggest dairy processor.
Saputo will pay 620 pence a share in cash for the maker of Cathedral City cheese and Clover dairy spread, the Montreal-based company said in a statement Friday, 12 percent more than Thursday’s close in London trading.
“Looks like a sensible home” for Dairy Crest, said Nicola Mallard, an analyst at Investec in London. The companies both make cheese, cream and whey powder but the takeover is unlikely to raise competition issues since Saputo doesn’t operate in Europe, she said.
The deal announcement comes after a five-day surge in Dairy Crest shares that lifted the price by 17 percent on heavy volume. The stock, which closed on Feb. 14 at 474.20 pence, finished trading Thursday at 555 pence. Almost 2.4 million shares traded, compared to the three-month average volume of 358,000 shares.
Dairy Crest rose as much as 13 percent to 627.50 pence on Friday. It’s unlikely another bidder will come along, according to Investec’s Mallard.
The Dairy Crest acquisition follows a push by the Canadian company into the Asia-Pacific region, where it bought Australia’s Murray Goulburn for about $1 billion last year and took full ownership of Warrnambool Cheese & Butter Factory Co. a year earlier as it bet on the area’s increased dairy consumption to fuel growth.
Both Saputo and Dairy Crest dominate their home markets in cheese, and Saputo said it aims to speed up the Esher, England-based company’s growth and business development. Dairy Crest directors backed the transaction. The Canadian company makes Woolwich goat cheese and Milk2Go flavored drinks.
“Our businesses are highly complementary,” Dairy Crest Chief Executive Officer Mark Allen said on a call with journalists.
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