UK-based dairy processing company Dairy Crest has acquired the remaining 50% shares in Promovita Ingredients Limited held by Fayrefield Foods Limited for £6m cash.
Promovita was established as 50:50 joint venture between Dairy Crest and Fayrefield in 2014. The JV was set up to develop and produce galacto-oligosaccharide (GOS), which is a prebiotic used in infant formula.
Dairy Crest believes that the complete ownership of Promovita will benefit its shareholders as it allows the dairy company to have sole control over the GOS business and to gain advantage of the benefits derived from this business. Dairy Crest has invested in manufacturing capability at Davidstow and has also produced samples of GOS in the past.
Dairy Crest CEO Mark Allen said: "This is a further important step in the evolution of our added-value ingredients business. We remain on track to begin commercial production of GOS in early 2016 and this acquisition gives us full control over the development of this exciting business."
Besides investment in GOS, Dairy Crest is also injecting £45m in equipment to manufacture demineralised whey (DW) at the Davidstow location, reports Foodmanufacture.co.uk.
Dairy Crest has inked a strategic partnership with Fonterra in this regard through which the latter would sell the two products in the infant formula sector, Foodmanufacture.co.uk reported.
In October, Dairy Crest received approval from Competition Markets Authority (CMA) to go ahead with the £80m sale of its dairy operations to Muller UK and Ireland Group. The deal is slated to be completed on 26 December 2015.
The CMA had earlier expressed reservations over the impact the deal would have on the milk supply in the Dairy Crest's Severnside dairy area, reported Expressandstar.com. To get green signal from the competition watchdog, Müller submitted a proposal to process up to 100 million liters of milk annually in Dairy Crest's Severnside dairy processing location on behalf of one smaller rival - Medina Dairy for up to eight years, and to supply to grocery retailers in the south west region.
