16th May 2005 07:00
Dairy Crest Group PLC16 May 2005 16 May 2005Dairy Crest Group plc ("Dairy Crest") Acquisition of Midlands Co-op Dairies ("MCD") Dairy Crest today announces the acquisition of the dairy businesses and assetsof the Midlands Co-operative Society for a cash consideration of £20 millionsubject to a working capital adjustment. The consideration will be financed outof existing bank facilities. MCD is the largest regional dairy operator in the UK. It processes approximately200 million litres of milk per annum at its dairy in Birmingham and distributesfresh milk, via 16 distribution centres to a range of retail, wholesale anddoorstep customers across the Midlands. Milk is sourced from 285 dairy farmslocated across the region. As at 22 January the value of the fixed assets beingacquired were £6.4 million. In the year ended January 2005 MCD made operatingprofits 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 isanticipated that, subject to employee consultation, the Birmingham dairyprocessing plant will be closed in due course. Milk processing will betransferred to Dairy Crest's existing dairies. In addition it is expected thatthree of the distribution depots at Oxford, Farringdon and Thame, where there isoverlap with Dairy Crest's existing depot network, will also close. This acquisition together with the acquisition of Starcross Foods and recentbusiness wins is expected to have a broadly neutral effect on earnings in thecurrent financial year and benefit group profitability by approximately £4million per annum thereafter. The integration and redundancy costs associatedwith the acquisition and proposed site closures are expected to result in anexceptional cash cost of approximately £9.0 million in the year ending 31 March2006. Drummond Hall, Chief Executive, Dairy Crest Group plc, said: "There has been significant consolidation amongst fresh milk processors over thelast few years reflecting the challenging market conditions. Dairy Crest hasbeen one of the prime consolidators in this process. The integration of MidlandCo-op Dairies into our own dairy operations will generate significantefficiencies as well as strengthening our customer base in the Midlands region.This, together with the recent acquisition of the Starcross Foods dairy inDerbyshire, extends our geographical footprint northwards and re-establishesDairy Crest's position as one of the leading players in the fresh milk market." Preliminary results for the year ended 31 March 2005 will be announced on 25thMay 2005. For further information, please contact: Dairy Crest Group plcWill Shaw, Investor Relations 01372 472 477Sinead Noble, Media 01372 472 249 Brunswick 020 7404 5959William Cullum / Laura Cummings This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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