Dairycrest to sell French spreads business and focus on UK

Dairy Crest Group has received a binding offer from Montagu Private Equity for the proposed disposal of the entire issued share capital of St Hubert following a strategic review of the business.

Montagu is offering a consideration of €430m (£344m) in cash for St Hubert, which Dairy Crest purchased in 2007 for €370m at a time when it planned to make further acquisitions in Continental Europe. Given that this strategy was unsuccessful, Dairy Crest believe the sale offers the best option for shareholders.

Low fat spreads business St Hubert is the second largest participant with a market share of approximately 39% by value as at March 2012.

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If the sale goes ahead, the proceeds will initially be used to reduce net debt.

For the year ended March 31st 2012, St Hubert generated EBITDA of €48.1m (£41.52m) and its gross assets were €169m (£141m).

In a statement, the company said: "We are delighted to have agreed in principle the proposed disposal of St Hubert, at a price which reflects the excellent progress the business has made under our ownership.

"Following the transaction, Dairy Crest will remain a broadly based dairy business entirely focused on the UK with strong brands including Cathedral City, Country Life, Clover and Frijj. It intends to continue to build on the success of its UK branded foods business and restore its Dairies business to a satisfactory level of profitability in the medium term.

"Over the coming months, from a strengthened financial position, Dairy Crest will consider a range of options taking into account the interests of all stakeholders."

The company said it expects the sale to be completed by September 30th, at which time the agreement expires.

NR