Dairy Crest sells milk operations to Müller UK & Ireland Group for £80m

Dairy Crest has agreed to sell its Dairies milk business to Müller UK & Ireland Group for approximately £80m.

The sale might take a few months to complete, with Dairy Crest then planning to focus on its cheese, packet butter and spreads businesses. These units together recorded revenues of £442m and product group profits of £56.1m in the year ending 31 March 2014.

Under the agreement with Muller, Dairy Crest will sell its factories at Foston, Chadwell Heath and Severnside, as well as the Hanworth glass bottling site. Dairy Crest will provide certain transitional services to Müller Wiseman Dairies.

A supply agreement between the two companies will have Müller Wiseman Dairies supplying bulk butter to Dairy Crest for the next five years.

Dairies currently processes and delivers about 1.3 billion litres of milk every year to both major retailers and residential customers. It also manufactures and sells the ready-to-drink flavoured milk brand FRijj, flavoured milk, cream, bulk butter and milk powders and products like Cathedral City cheese and Country Life butter.

In the financial year ending March 2014, Dairies recorded revenue of £944.8m. It had net assets worth £112.8m.

Dairy Crest CEO Mark Allen said: "Completing this transaction would be a positive development for Dairy Crest and for the UK dairy industry.

"The disposal will allow Dairy Crest to focus on continuing to grow our successful and innovative branded cheese and spreads operations. We will also deliver additional added value sales through our whey investment. We are confident that this focus will deliver further medium term profit growth for our shareholders."

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Image: Dairy Crest’s milk processing unit in the UK. Photo: courtesy of Dairy Crest.