Canadian dairy cooperative Agropur said on Tuesday it would acquire the dairy processing assets of Davisco Foods International Inc.
Agropur said in a statement the acquisition was targeted for an Aug. 1 close. It said the deal would double Agropur’s U.S. processing operations and increase its global milk intake by 50 percent.
The acquisition includes, among other facilities and sales offices, three Davisco cheese processing factories in Le Sueur, Minnesota, Jerome, Idaho, and Lake Norden, South Dakota, and an ingredients plant in Nicollet, Minnesota. Davisco is based in Le Sueur and employs 900 people.
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“With over $1 billion US in annual sales, this acquisition is by far the largest transaction in Agropur’s 76 year history,” Serge Riendeau, president of Agropur, said in a release.
“This transaction, combined with the most recent ones in Canada, will increase our sales to over $5.8 billion Cdn on an annualized basis, and we should reach 5.3 billion litres of milk processed each year in 41 plants across North America.
“As a result of this acquisition, the U.S. operations of Agropur should reach the top five cheese and ingredients processors in the United States to even better serve its clients.”
Quebec-based Agropur said it expects to fund the deal using its existing cash resources and new credit facilities.
Desjardins Capital Markets acted as financial advisor to Agropur.
Earlier this month, Agropur announced an agreement with Sobeys to buy several dairy processing plants in Western Canada that the grocery chain had acquired when it bought Canada Safeway. It also signed a supply agreement with Sobeys.
It also announced its intention to buy Northumberland Dairy Co-operative’s dairy and food distribution assets in New Brunswick for an undisclosed purchase price.
The agreement includes the Miramichi plant in New Brunswick, which processes 27 million litres of milk per year, Northumberland’s distribution centres and its brands.
The acquired operations have annual sales of $67 million. Northumberland will keep its hardware and building supply operations.
