Saputo, a Canadian dairy processor, agreed on Monday to buy Dean Foods‘ Morningstar division for about $1.45 billion in cash to help expand its presence in the United States.
The deal will give Saputo, one of the world's biggest dairy companies, its highest-profile business in America to date. Morningstar Foods - not to be confused with Morningstar Farms, the popular maker of vegetarian food - makes Friendship cottage cheese and various private-label dairy products like coffee creamers and ice cream mix.
For the year ended Sept. 30, Morningstar reported about $1.6 billion in revenue and $153 million in earnings before interest, taxes, depreciation and amortization. It has about 2,000 employees and runs factories in nine states.
“Our customer-centric business model and a disciplined cost control mindset have enabled our growth and we look forward to the next chapter in Morningstar's evolution,†Kevin Yost, Morningstar's president, said in a statement .
Saputo said that the deal would help expand its own manufacturing and distribution networks and could serve as the base for more takeover opportunities. It expects the deal to immediately add to its earnings.
And Dean Foods said that it expected to gain about $887 million in proceeds from the deal. It will use that money to pay down debt.
The company announced in September that it was considering selling Morningstar, which analysts considered a natural move since it was spinning off a complementary division, WhiteWave.
The deal is expected to close by the end of the year or early next year.
Dean Foods was advised by Evercore Partners and the law firms Skadden, Arps, Slate, Meagher & Flom and Dechert.
