Dairy group’s £80m takeover deal referred to competition authority

A PLAN by Shrewsbury-based dairy products giant Müller UK & Ireland to acquire the dairy operations of southern rival Dairy Crest for £80m has been put on hold until it is cleared by the Competition and Markets Authority.

Muller said when it first announced the deal back in November that the sale was conditional on the approval of the relevant competition authorities. It warned then that the process could take several months to conclude.

In a statement to the London Stock Exchange today, Dairy Crest said that following talks with the European Commission, the matter had now been now been referred back to the UK for review by the CMA.

It added that the transaction remained on track and already had the approval of Dairy Crest shareholders.  
 
Mark Allen, chief executive of Dairy Crest, said: “This transaction will be a positive development for both Dairy Crest and the UK dairy industry as a whole, delivering economies of scale that will help to create a more sustainable UK dairy sector that is better placed to compete on the global stage.

“It has always been our preference for the transaction to be reviewed in the UK, so we welcome this referral back to the CMA as a positive step. We will work with Müller and the CMA to progress the merger review as quickly as possible.”
 
Surrey-based Dairy Crest’s brands include Cathedral City, the nation’s favourite cheese brand, Davidstow and Country Life and Clover.
 
Dairy Crest said last autumn that once the deal had completed it would focus on its profitable, predominantly branded, cheese and spreads operations. It will also aim to grow its revenue and profits by continuing to develop whey-based products, such as demineralised whey powder and galacto-oligosaccharide, for the fast growing global infant formula market.  
 
The firm said that combining the two businesses would build on the progress that it had already achieved.  It suggested it would also strengthen the wider UK dairy sector bringing much needed security for Britain’s dairy farmers.  
 
Dairy Crest’s dairies operations process and deliver around 1.3bn litres of British milk per annum to major retailers.

Following the deal’s completion, the two companies will also enter into a supply agreement whereby Müller Wiseman Dairies will sell bulk butter to Dairy Crest for five years.  
 
Dairy Crest will retain manufacturing sites including one in Nuneaton.