Canada-based dairy cooperative Agropur has agreed to acquire the assets of US-based cheese and dairy ingredients company Davisco Foods.
As part of the acquisition, the company will acquire three Davisco cheese processing factories in Le Sueur (Minnesota), Jerome (Idaho) and Lake Norden (South Dakota).
The company will also acquire an ingredients plant in Nicollet (Minnesota), a Friendly Confines Cheese Shoppe in Le Sueur (Minnesota), as well as sales offices located in Minnesota, Shanghai (China Sales Office), Singapore and Geneva, and distribution centers located in Rotterdam, Netherlands, and Tianjin, China.
Subject to the satisfaction of customary closing conditions, the acquisition is expected to be close on 1 August 2014.
With this acquisition, Agropur will double its US processing operations and increase its global milk intake by 50%.
It will also strengthen the company's position in the North American and international dairy industries.
Agropur will finance the total consideration from existing cash resources and new credit facilities fully-underwritten by the co-lead arrangers and joint bookrunners Desjardins Capital Markets, BMO Capital Markets and Rabobank. Desjardins Capital Markets acted as financial advisor to Agropur.
Agropur president Serge Riendeau said: "With over US$1 billion in annual sales, this acquisition is by far the largest transaction in Agropur 76 year history.
"This transaction, combined with the most recent ones in Canada, will increase our sales to over US$5.4 billion on an annualized basis, and we should reach 12.1 billion pounds of milk processed each year in 41 plants across North America.
"As a result of this acquisition, the US operations of Agropur should reach the top five cheese and ingredients processors in the United States to even better serve its clients."
Agropur CEO Robert Coallier said: "The world dairy industry is consolidating at an accelerated pace and our acquisition of Davisco supports our objective of increasing our global presence.
"One of our key business objectives is to pursue strategic acquisitions to diversify our geographic markets and product portfolios.
"This acquisition, like our other recent ones, will help solidify the development and sustainability of our cooperative by securing a favorable strategic positioning at all national, North American and global levels. To remain a leader in our field, we must pursue and continue development efforts that aim directly at profitable growth."
Headquartered in Le Sueur, Minnesota, Davisco processes 3.8 billion pounds (1.7 billion liters) of milk annually and has 900 employees.
