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Saputo seizes consolidation openings in cheese market

By staff reporter , 29-Jan-2008

Dairy processor Saputo intends to acquire the activities of Wisconsin-based Alto Dairy Cooperative, saying it hopes to increase its presence in the fragmented US cheese market.

"We have said before that we are looking to expand and we see lots of opportunities in the US for consolidation," Manon Goudreault told Saputo is currently among the top five cheese producers in the US, but hopes this business move will help it achieve its goal of improving its position. As part of this expansion strategy, Saputo acquired Land O'Lakes West Coast industrial cheese business based in California for $216m last February. As well as strengthening its presence in the cheese sector, Saputo hopes to increase innovation through the new facility. Alto produces Italian (mozzarella and provolone) and American-style cheeses (Cheddar varieties, Monterey Jack, Muenster, Fontina and Gouda), which Saputo considers an area it is very strong in, and one it hopes to build on. Alto also concentrates on whey products, which are marketed nationwide under a variety of brand names and private labels. The total consideration for the acquisition is $160m. It has been approved by Alto's board of directors and is now subject to approval by the cooperative's members at a meeting on February 27. Alto has sales of $378m and EBITDA of $19.6m. It operates two plants and has a total of 467 employees. Saputo says it has no intention at the moment of changing the staff structure. After the acquisition, Saputo will have 47 manufacturing facilities worldwide: 17 in the US, 26 in Canada, two in Argentina, one in Germany and one in the UK. Saputo manufactures products under brands such as Saputo, Alexis de Portneuf, Armstrong, Baxter, Dairyland, De Lucia, Dragone, DuVillage de Warwick, Frigo, Kingsey,, Nutrilait, Ricrem, Stella, Treasure Cave, HOP&GO!, Rondeau and Vachon. Total revenues for the fiscal year ending March 31 2007 $4,001bn, down by 0.5 percent compared to the previous year. Net earnings totaled $238.5m.

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