Dairy Crest acquires Midlands Co-op Dairies

Midlands Co-op Dairies is the largest regional dairy operator in the UK, processing approximately 200 million litres of milk per annum.

17/05/05 Dairy Crest has announced the acquisition of the dairy businesses and assets of the Midlands Co-operative Society for a cash consideration of £20 million subject to a working capital adjustment. The consideration will be financed out of existing bank facilities.

MCD is the largest regional dairy operator in the UK. It processes approximately 200 million litres of milk per annum at its dairy in Birmingham and distributes fresh milk, via 16 distribution centres to a range of retail, wholesale and doorstep customers across the Midlands. Milk is sourced from 285 dairy farms located across the region. As at 22 January the value of the fixed assets being acquired were £6.4 million. In the year ended January 2005 MCD made operating profits before central overheads of £0.6 million on sales of £89 million.

MCD will be consolidated into Dairy Crest’s existing dairy operations and it is anticipated that, subject to employee consultation, the Birmingham dairy processing plant will be closed in due course. Milk processing will be transferred to Dairy Crest’s existing dairies. In addition it is expected that three of the distribution depots at Oxford, Farringdon and Thame, where there is overlap with Dairy Crest’s existing depot network, will also close.

This acquisition together with the acquisition of Starcross Foods and recent business wins is expected to have a broadly neutral effect on earnings in the current financial year and benefit group profitability by approximately £4 million per annum thereafter. The integration and redundancy costs associated with the acquisition and proposed site closures are expected to result in an exceptional cash cost of approximately £9.0 million in the year ending 31 March 2006.