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Agropur adds U.S. firm and projects US$1 billion in annual sales


Martin Bolduc, fourth generation farmer and one of the owners at La Station a dairy and cheese farm, amid his Holstein cows, in Compton, about 165 km east of Montreal. Photograph by: Vincenzo D’Alto , The Gazette

Quebec dairy cooperative Agropur is making a bold move south of the border by acquiring the dairy-processing assets of Davisco Foods International, a privately held cheese and dairy ingredients company based in Le Sueur, Minn.

Terms of the deal were not revealed Tuesday, but Agropur officials said it was the biggest acquisition in its 76-year history, and will double Agropur’s processing operations in the U.S.

With 900 employees, Davisco produces more than 170 million kilograms of cheese and 80 kilograms of whey annually in South Dakota, Minnesota and Idaho.

Agropur will be getting a cheese-processing factory in each of the three states, an ingredients plant and cheese shop in Minnesota, and a number of sales and distribution centres around the world generating annual sales of more than US$1 billion.

Its total revenue after the acquisition will be in the neighbourhood of $5.8 billion, and Agropur will be in the top five cheese and ingredients processors in the U.S.

“To remain a leader in our field, we must pursue and continue development efforts that aim directly at profitable growth,” said Robert Coallier, chief executive officer of Agropur.

“The world dairy industry is consolidating at an accelerated pace and our acquisition of Davisco supports our objective of increasing our global presence.”

It’s the second major international deal negotiated this year in the dairy industry by Quebec operators.

Montreal-based Saputo Inc., which already generates more than half its revenue outside of Canada, won a bidding war for Australia’s oldest dairy, Warmambool Cheese & Butter, ultimately paying upward of $100 million more than its starting offer of $378 million. Warmambool, with annual revenue of about $479 million, was coveted as an entry vehicle for markets in China and Asia. Saputo shares are up 30 per cent this year.

Coallier said one of Agropur’s business objectives is the pursuit of strategic acquisitions to diversify its geographic markets and product portfolios. It already had plants in Wisconsin and Minnesota.

“This acquisition, like our other recent ones, will help solidify the development and sustainability of our cooperative by securing a favourable strategic positioning at all national, North American and global levels,” he said.

Jon Davis, chief executive officer of Davisco, said the management team is looking forward to becoming part of the Agropur family.

“These are exciting times, and it will be a tremendous pleasure and an honour to be part of Agropur going forward.”

The deal is expected to close next month.

Based in Longueuil, Agropur is Canada’s largest dairy cooperative with 3,554 dairy-producer owners and 6,500 employees. It currently has 32 plants across Canada and the U.S. and a portfolio of brands that includes Natrel, Québon, OKA and Sealtest.

Source: Montreal Gazette


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