UK-based Dairy Crest has agreed to divest its Dairies operations to Müller UK & Ireland for £80m, citing slump in profits during the six months ended September.
The transaction includes production plants at Foston, Chadwell Heath and Severnside, as well as Hanworth glass bottling site, where Dairy Crest is consulting with employees on the site's future, and 72 depots.
It will also require Dairy Crest to sell its fresh liquid milk, flavored milk including the FRijj brand, bulk and potted cream, bulk butter and milk powder businesses.
Dairy Crest will, however, retain full ownership of the previously closed dairies at Totnes and Fenstanton; its Chard site, as well as a number of already closed depots.
Upon completion of the divestment, Dairy Crest will focus on its cheese and packet butter and spreads businesses, which includes Cathedral City brand, Davidstow, Clover, Country Life and the fast growing Frylight one calorie cooking spray.
Dairy Crest CEO Mark Allen said: "Completing this transaction would be a positive development for Dairy Crest and for the UK dairy industry. The combination of our Dairies operations with those of Müller Wiseman Dairies will create efficiencies and economies of scale that will help to create a more sustainable UK dairy sector that is better placed to compete on the global stage".
"The disposal will allow Dairy Crest to focus on continuing to grow our successful and innovative branded cheese and spreads operations. We will also deliver additional added value sales through our whey investment. We are confident that this focus will deliver further medium term profit growth for our shareholders."
Additionally, both the companies will enter into a supply agreement, under which Müller Wiseman Dairies will sell bulk butter to Dairy Crest for five years.
Dairy Crest has also commenced a major project to develop whey-based products including demineralised whey powder and galacto-oligosaccharide at its creamery in Davidstow which will be used in infant formula production.
The company will also continue to buy milk direct from around 400 supplying farmers for its Davidstow creamery to produce cheese and whey.
Image: The acquisition comprises the fresh liquid milk, flavoured milk including the FRijj brand, bulk and potted cream, bulk butter and milk powder businesses of Dairy Crest. Photo: courtesy of Dairy Crest.
