Agropur, Canada’s largest dairy cooperative, and Davisco Foods International, a US-based cheese and dairy ingredients company, today announced they have entered into an agreement for Agropur to acquire the dairy processing assets of Davisco.
The acquisition is targeted to close August 1, 2014, subject to satisfaction of customary closing conditions. This transaction will double Agropur’s US processing operations and will increase its global milk intake by 50%. It will also strengthen its position in the North American and international dairy industries.
"With over $1 billion in annual sales, this acquisition is by far the largest transaction in Agropur 76 year history," said Serge Riendeau, president of Agropur. "This transaction, combined with the most recent ones in Canada, will increase our sales to over CDN$5.8 billion (US$5.4 billion) on an annualized basis, and we should reach 5.3 billion litres (12.1 billion pounds) of milk processed each year in 41 plants across North America. As a result of this acquisition, the US operations of Agropur should reach the top five cheese and ingredients processors in the United States to even better serve its clients."
"The world dairy industry is consolidating at an accelerated pace and our acquisition of Davisco supports our objective of increasing our global presence," said Robert Coallier, CEO, Agropur.
"One of our key business objectives is to pursue strategic acquisitions to diversify our geographic markets and product portfolios. This acquisition, like our other recent ones, will help solidify the development and sustainability of our cooperative by securing a favorable strategic positioning at all national, North American and global levels. To remain a leader in our field, we must pursue and continue development efforts that aim directly at profitable growth," Coallier added.
"I am excited about this opportunity and what it affords our suppliers, customers and most importantly, our employees," said Jon Davis, Davisco CEO. "Davisco and Agropur have built, over 70 years, very similar cultures. Along with all of Davisco’s management team, I look forward to becoming part of the Agropur family and I am very excited about what the future holds. These are exciting times, and it will be a tremendous pleasure and an honor to be part of Agropur going forward," he added.
"This acquisition increases in an important way our capacity to meet our clients’ needs for cheese and dairy ingredients in the US," concluded Agropur’s USA Cheese and ingredients Division, Doug Simon. Headquartered in Le Sueur, Minnesota, Davisco processes 1.7 billion liters (3.8 billion pounds) of milk annually and has 900 employees.
The acquisition includes three Davisco cheese processing factories in Le Sueur (Minnesota), Jerome (Idaho) and Lake Norden (South Dakota). It also includes an ingredients plant in Nicollet (Minnesota), a Friendly Confines Cheese Shoppe in Le Sueur (Minnesota), as well as sales offices located in Eden Prairie, Minnesota (North America Sales office), Shanghai (China Sales Office), Singapore (Southeast Asia Sales Office) and Geneva, Switzerland (Europe Sales Office), and distribution centres located in Rotterdam, the Netherlands, and Tianjin, China.
Davisco produces over 170 million Kg (375 million pounds) of cheese and 80 million Kg (180 million pounds) of whey ingredients annually.
Agropur will finance the total consideration from existing cash resources and new credit facilities fullyunderwritten by the Co-Lead Arrangers and Joint Bookrunners Desjardins Capital Markets, BMO Capital Markets and Rabobank. Desjardins Capital Markets acted as financial advisor to Agropur.