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Agropur to double US presence with Davisco Foods acquisition

Agropur to double US presence with Davisco Foods acquisition

Canadian dairy Agropur has agreed to acquire the processing assets of Minnesota cheese and whey ingredients manufacturer Davisco Foods International - a deal that will double its US operational presence.

The deal, set to be completed by August 1 2014, will see Agropur absorb three Davisco cheese plants in Minnesota, Idaho, South Dakota, and the firm's Nicollet, Minnesota whey ingredients facility.

Quebec-based cooperative Agropur, Canada's second largest dairy, said the purchase will see it rank among the top five cheese and ingredients manufacturers in the US, and "strengthen its position" in North America and on the international stage by doubling its US dairy processing operations and increasing its global milk intake by 50%.

“The world dairy industry is consolidating at an accelerated pace and our acquisition of Davisco supports our objective of increasing our global presence,” said Robert Coallier, CEO, Agropur.

Davisco's Le Sueur cheese plant.

“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. To remain a leader in our field, we must pursue and continue development efforts that aim directly at profitable growth," Coallier added.

Agropur will also inherit Davisco's sales offices in Minnesota, Shanghai, Singapore, and Geneva; its distribution centres in Rotterdam, the Netherlands, and Tianjin, China; and its Friendly Confines Cheese Shoppe in Le Sueur, Minnestoa.

Both parties declined to disclose the agreed transaction price, but Agropur, Canada's second largest dairy, acknowledged that it was "by far the largest" in its history.

North American acquisitions

Davisco Foods currently processes 1.7bn liters of milk annually, producing more than 170m kg of cheese and 80m kg of whey ingredients.

Davisco CEO, Jon Davis, whose grandfather Stanley Davis established the company in 1943, said he was "excited about what the future holds."

“Davisco and Agropur have built, over 70 years, very similar cultures," he said.

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

Agroupr's acquisition of Davisco is the third North American deal to be sealed by the Canadian dairy cooperative this month.

On 14 July 2014, Agropur announced it had agreed to buy the dairy manufacturing and distribution assets of New Brunswick-based Northumberland Dairy Cooperative for an undisclosed fee.

Less than a week before, Canada's second largest retailer Sobeys agreed to sell four manufacturing facilities and numerous licensing and supply agreements in Western Canada to Agropur for CDN$356m (US$331m, €244m).

Yesterday's transaction, combined with the aforementioned Canadian purcahses, will, Agropur claims, drive up annual sales to more than CDN$5.8bn (US$5.4bn, €4bn) - a figure that would see it rank among the world's 20 top dairy manufacturers.

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