Agropur, Canada's largest dairy cooperative, and Davisco Foods International, said they agreed 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. Officials say the transaction will double Agropur's U.S. processing operations and will increase its global milk intake by 50%. It also will strengthen Agropur’s position in the North American and international dairy industries.
"With over US$1 billion in annual sales, this acquisition is by far the largest transaction in Agropur’s 76-year history," said Serge Riendeau, Agropur president. "This transaction, combined with the most recent ones in Canada, will increase our sales to over US$5.4 billion on an annualized basis, and we should reach 12.1 billion pounds 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."
"The world dairy industry is consolidating at an accelerated pace and our acquisition of Davisco supports our objective of increasing our global presence," added Robert Coallier, Agropur CEO. "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,” he continued. “To remain a leader in our field, we must pursue and continue development efforts that aim directly at profitable growth.”
Headquartered in Le Sueur, Minn., Davisco processes 3.8 billion pounds (1.7 billion liters) of milk annually and has 900 employees.
The acquisition includes three Davisco cheese processing factories in Le Sueur, Minn., Jerome, Idaho, and Lake Norden, S.D. It also includes an ingredients plant in Nicollet, Minn., a Friendly Confines Cheese Shoppe in Le Sueur, Minn., as well as sales offices located in Eden Prairie, Minn. (North America sales office), Shanghai (China sales office), Singapore (Southeast Asia sales office) and Geneva, Switzerland (Europe sales office), and distribution centers in Rotterdam, the Netherlands, and Tianjin, China.
Davisco produces more than 170 million Kg (375 million pounds) of cheese and 80 million Kg (180 million pounds) of whey ingredients annually.
"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 Doug Simon, president of Agropur's USA Cheese and ingredients Division.
Agropur said it will finance the total consideration from existing cash resources and new credit facilities fully-underwritten 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.