Dairy Crest has announced that it has agreed to sell the assets of its Dairies operations to Müller UK & Ireland Group for £80m.
The sale is conditional on the approval of the relevant competition authorities. This process is expected to take several months, during which time Dairy Crest will focus on continuing to provide high levels of service and delivery throughout the supply chain.
The combination of Dairy Crest’s Dairies operations with those of Müller Wiseman Dairies (the fresh milk, cream and butter business owned by Müller) will build on the progress Dairy Crest has already made in improving efficiency.
It will help to create a more sustainable UK dairy sector by delivering economies of scale and cost efficiencies that will underpin investment in the industry. This in turn should help the UK to compete more successfully in global markets, which is essential for British dairy farmers.
Dairy Crest believes the transaction will create a stronger business that protects long term employment and has the potential to help reduce costs and increase efficiency.
After completion Dairy Crest’s focus will be on its profitable, predominantly branded, cheese and spreads operations. It will also grow its revenue and profits by continuing to develop whey-based products for the fast growing global infant formula market.
Dairy Crest’s Dairies operations process and deliver around 1.3 billion litres of British milk per annum to major retailers, ‘’middle ground’ customers (including, for example, smaller retailers, coffee shops and hospitals) and residential customers. It also manufactures and sells Dairy Crest’s ready to drink flavoured milk brand, FRijj, flavoured milk, cream, bulk butter and milk powders.
In the year ended 31 March 2014 Dairy Crest’s Dairies operations recorded revenue of £944.8m and product group profits of £0.6m excluding profits from selling surplus properties which were £18.2m. At 31 March 2014 the total assets employed in the Dairy Crest’s Dairies operations which are being sold were £253.5m and the net assets employed were £112.8m.