Dean to sell Morningstar to Saputo

Dean to sell Morningstar to Saputo

- Deal expected to close quickly. - Dean plans to use proceeds to decrease debt. - Saputo sees Morningstar as providing impetus for fu

DEAN Foods Co., the largest dairy processor in the U.S., announced last week an agreement to sell its Morningstar Foods division to Saputo Inc., the largest dairy processor in Canada.

Dean said the deal is priced at $1.45 billion and is subject to customary closing conditions, including regulatory review, but should close yet this month or early next year.

Morningstar is a leading manufacturer of dairy and non-dairy cultured and extended-shelf life products, including cream and creamers, cottage cheese, sour cream, ice cream mixes, whipping cream, aerosol whipped toppings and iced coffees that are marketed under a broad line of private labels to foodservice, grocer and other customers across the U.S. It had 2011 sales that totaled $1.3 billion.

Dean, which recently sold a minority stake in its organic and plant-based beverages and specialty products division, The WhiteWave Foods Co., in a public offering (Feedstuffs, Oct. 29), announced earlier this year that it was considering selling Morningstar (Feedstuffs, Oct. 1).

Dean chief executive officer Gregg Tanner said proceeds from the Morningstar sale will be used "to significantly reduce" corporate debt, providing the company with flexibility to "sharpen our focus" on the conventional dairy business.

Dean said it expects to realize $887 million in proceeds.

Dean also said it will allocate $60 million to WhiteWave as consideration for the termination of an agreement with WhiteWave to acquire production capacity at one Morningstar facility and manufacturing equipment at another Morningstar plant.

Saputo said Morningstar will complement its U.S. activities, which are organized as Saputo Dairy Products USA.

The company said the acquisition provides its U.S. operations with a national manufacturing and distribution system, expands its line of products and "will broaden the range of Saputo's future acquisition opportunities."

Morningstar has approximately 2,000 employees and operates 10 manufacturing plants in nine states.

Saputo, headquartered in Montreal, Que., produces and markets a major platform of dairy products, including fluid milk, cheese, dairy ingredients, yogurt and snack cakes in Canada, the U.S. and more than 50 other countries. It is the third-largest cheese producer in the U.S.

The company has approximately 10,000 employees and 47 manufacturing plants in five countries.

Saputo reported fiscal 2012 sales of $6.9 billion (Canadian).

Dean, headquartered in Dallas, Texas, processes and markets fluid milk under more than 50 local and regional brands and private labels, as well as cultured dairy products, ice cream, juice, tea, bottled water and other products.

The company reported 2011 sales of $13.1 billion.

Volume:84 Issue:51

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