Saputo to buy US diary supplier Morningstar

12/3/2012 11:00 AM
By Associated Press

MONTREAL (AP) — Canadian cheese maker Saputo Inc. is bolstering its position in the United States by pursuing the largest acquisition in its history, a $1.45 billion deal to buy Morningstar Foods.

Montreal-based Saputo said Monday it is expanding its U.S. operations by adding dairy and non-dairy products to its current operations as a cheese manufacturer, distributor and exporter. The move effectively replicates the breadth of its operations in Canada, creating a U.S. division of comparable size.

"This is only going to solidify our position as the No. 2 provider of dairy in North America," CEO Lino Saputo Jr. said.

Morningstar has about 2,000 employees and 10 manufacturing plants in the United States.

Following the acquisition, Saputo will have about 12,000 employees and 57 manufacturing plants in five countries.

Morningstar is a subsidiary of Dallas-based Dean Foods, which said that it expects to receive $887 million from the sale after taxes and expenses. It said the money would be used to reduce Dean's debts. Morningstar makes a variety of dairy and non-dairy products such as creams, ice cream mixes, sour cream and cottage cheese. Saputo said it will benefit from Morningstar's national manufacturing and distribution footprint.

Saputo said there are no consolidation plans since Morningstar's operations are very different from its own in the U.S.

Saputo won Morningstar through a bidding process about two months after being approached by an investment banker.

"Morningstar is an attractive business and we believe that it will continue to grow and thrive in Saputo's portfolio," said Gregg Engles, chairman of Dean Foods.

Lino Saputo said the company has the financial capacity to add up to $3.5 billion of debt in order pursue other acquisitions in the U.S., Latin America or Australia/New Zealand.


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