Dairy Crest has agreed to sell its dairies operation to Müller UK & Ireland Group in a deal worth £80m.
The sale - subject to approval from competition authorities, Dairy Crest’s shareholders and an employee consultation - will see Müller acquire Dairy Crest’s fresh liquid milk, flavoured milk (including the Frijj brand), bulk and potted cream, bulk butter and milk powder businesses.
Müller will also take over Dairy Crest’s dairy facilities at Severnside, Chadwell Heath, Foston and Hanworth together with around 70 depots.
Dairy Crest claimed the deal would build on progress it had already made in improving efficiency, and would “create a more sustainable UK dairy sector by delivering economies of scale and cost efficiencies that will underpin investment in the industry.”
After completion, Dairy Crest will focus will be on its profitable, predominantly branded, cheese and spreads operations and the development of whey-based products for the global infant formula market.
Dairy Crest will retain ownership of the previously closed dairies at Totnes and Fenstanton; its Chard site, where it consulting with employees on the site’s future; and a number of already closed depots.
The two companies will also enter into a supply agreement whereby Müller Wiseman Dairies will sell bulk butter to Dairy Crest for five years. In addition, Dairy Crest will provide certain transitional services to Müller Wiseman Dairies.
Dairy Crest will continue to buy milk direct from around 400 supplying farmers for its Davidstow creamery to produce cheese and whey. The proceeds from an approved sale will initially be used by Dairy Crest to reduce net debt.
“Dairy Crest is very proud of the dairy business it has built and we are delighted it will be combined with Müller Wiseman Dairies’ equally well-established operation, said CEO Mark Allen.
“This proposed sale is a great opportunity for our two companies, our farmers, our staff, our customers and consumers”.
The combined business will also provide a platform for higher investment in production efficiencies which will unlock the potential for substantially higher levels of innovation, product development and exports of dairy products made in Britain, with milk from British dairy farms.
Müller UK & Ireland Group CEO Ronald Kers said the acquisition would create a “more competitive, sustainable, efficient and innovative dairy processor in the UK which will generate real benefits for customers, consumers, employees and suppliers”.
“We are concerned the dynamics of the UK fresh milk market are unsustainable for dairy processors in the mid to long term and this acquisition will allow us to reduce our costs, increase our efficiencies and invest in the future.”
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