Dean Foods Completes Sale Of Morningstar Foods Division To Saputo Inc.

Morningstar produces a variety of dairy and non-dairy extended shelf-life (“ESL”) products, including creams and creamers, ice cream mixes, whipping cream, aerosol whipped toppings, iced coffee, half and half, value-added milks, as well as cultured products such as sour cream and cottage cheese.

4 Jan 2013 --- Saputo Inc. has completed the transaction announced on December 3, 2012 and acquired Morningstar Foods, LLC, a subsidiary of Dean Foods Company. The purchase price of US$1.45 billion was financed through a combination of US$250 million in available cash and a new bank loan of US$1.2 billion.

Morningstar produces a variety of dairy and non-dairy extended shelf-life (“ESL”) products, including creams and creamers, ice cream mixes, whipping cream, aerosol whipped toppings, iced coffee, half and half, value-added milks, as well as cultured products such as sour cream and cottage cheese. These products are manufactured under a wide array of private labels and owned brands, and are sold nationwide through an internal sales force and independent brokers. Morningstar serves the needs of retailers, national quick-serve restaurant chains, grocery stores, mass merchandisers and distributors across the United States. Morningstar has about CDN$1.6 billion in annual revenues, approximately 2,000 employees and operates 10 manufacturing facilities located in nine states.

The combined business will have approximately 12,000 employees, 57 manufacturing facilities in five countries and combined annual revenues of approximately CDN$8.6 billion. The acquisition of Morningstar complements the activities of the Saputo Dairy Products Division (USA). Through this acquisition, Saputo Inc. (“Saputo”) will benefit from Morningstar’s national manufacturing and distribution footprint and will optimize coast-to-coast service. This transaction expands product offering to customers in the United States and broadens the range of Saputo’s future acquisition opportunities.

As a result of this transaction, Dean Foods expects to realize approximately US$887 million in proceeds, net of taxes and expenses. The Company plans to use all net proceeds toward fully retiring its remaining senior secured term debt, significantly lowering its leverage and increasing its financial flexibility.