Saputo to acquire U.K.-based Dairy Crest

The deal, estimated at $1.7 billion, will see the Montreal dairy giant enter the U.K. market.

Saputo has agreed to acquire U.K.-based Dairy Crest in a deal valued at around CND $1.7 billion, marking its entrance into the market at a competitive time for the industry.

Under the agreement, the Montreal-based dairy giant will take ownership of Dairy Crest, whose products include a variety of cheeses, butters, spreads and oils, including the Cathedral City, Clover, Country Life and Frylight brands. The deal is expected to close later this later, pending regulatory approvals.

Saputo said the agreement will enable it to grow its international presence and enter the U.K. by investing in “a well-established and successful industry player with a solid asset base and an experienced management team.”

For the period ended March 31, 2018, Dairy Crest reported revenues of around CDN $786.3 million and after-tax profits of $257.3 million.

Saputo is the largest cheese manufacturer and the largest milk and cream processor in Canada, with a brand portfolio that includes Armstrong, Dairyland, Devondale, Neilson and Nutrilait.

In an interview with the Canadian Press in August, Saputo CEO Lino Saputo admitted the company was facing stiff competition due to market conditions, operating costs and labour shortages. He added that the company was eyeing opportunities for mergers and acquisitions, especially in the U.S., European, Argentinian and Australian markets.

The deal follows Kraft Heinz’s recent decision to offload its Canadian natural cheese business to dairy and beverage giant Parmalat SpA for $1.62 billion.