The British owners of Cathedral City cheddar and Clover margarine have agreed a near-£1bn takeover from the Canadian dairy company Saputo.
On Friday Dairy Crest recommended shareholders accept an offer from Saputo that values the FTSE 250 company at £975m.
In a statement to the stock market, Saputo said there would be a “limited rationalisation of employee roles” at Dairy Crest, mainly related to no longer needing to report as a UK-listed company.
However, the statement said Saputo did not intend to make any material change in how the company was run. Saputo is understood to have no plans to change agreements with dairy farmer suppliers in Devon and Cornwall.
Saputo is one of the top 10 largest dairy companies in the world, and has made 30 acquisitions since 1997, but it does not currently have any operations in the UK. The Montréal-based company is listed in Toronto but the Saputo family’s investment vehicle still holds more than 30% of its shares.
Dairy Crest employs more than 1,100 people in seven locations, including a creamery in Davidstow, Cornwall. Its other well-known brands include Country Life butter and Frylight cooking oil.
Stephen Alexander, chair of Dairy Crest, said it would allow the company to “accelerate its growth ambitions”. The existing management team will continue to run Dairy Crest.
Last May, Dairy Crest raised almost £70m from investors to expand the Davidstow creamery to meet overseas demand for Cathedral City in markets such as China.
Dairy Crest’s share price has surged in the past week, although there have been no media reports about the potential acquisition. The company’s shares were valued at 476.2p on Friday 15 February and jumped almost 13% to 625p after news of the deal. A spokesperson for Dairy Crest said the company had been in discussions with the Takeover Panel throughout the past week.
Saputo’s offer, of 620p per share, represents a premium of only 12% over Thursday’s closing price of 555p. However, it represents a premium of 33.8% over the average price of share in the past 90 days.
Lino Saputo Jr, the chair and chief executive of Saputo, said the offer gave “immediate value certainty” to shareholders.