Britain's largest dairy products company Dairy Crest yesterday announced it was selling the assets of its dairy operations to Muller UK & Ireland Group for £80m.
Under the deal, Muller’s UK division – Muller Wiseman Dairies – will take over factories at Foston, Derbyshire, Chadwell Heath, in east London, and Severnside, Gloucestershire.
The two companies will also enter into a supply agreement under which Muller Wiseman Dairies sells bulk butter to Dairy Crest for five years.
JP Morgan Cazenove adviser Alex Bruce told City A.M. that the deal would serve to “position Dairy Crest well and represents an attractive prospect for it clients”.
The Surrey-based company’s dairies business has been a drag on results in recent times. It posted a 95 per cent fall in profit for the first half of the year and has since been focusing on improving its position by cutting distribution costs, brand improvement and selling surplus properties.
The sale is expected to take several months to complete and is conditional on the approval of Dairy Crest’s shareholders and the relevant competition authorities.
Dairy Crest chief executive Mark Allen said: “The combination of our dairy operations with those of Muller 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.”
Following the news, Dairy Crest’s share price rose almost 15 per cent yesterday to close at 490p.