Dairy Crest joint venture trebles in size with pounds 66m acquisition

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The Independent Online
Yoplait Dairy Crest, the joint venture company of Dairy Crest Group and Yoplait of France, has bought Raines, a family-owned dairy company, for pounds 66.25m in cash. The deal is the first big acquisition made by Dairy Crest since its flotation in August 1996.

Raines is a leading supplier of fresh dairy products, covering yoghurt, cottage and soft cheeses, fresh cream, dressings, ice cream and desserts, to UK retailers. It employs about 1,060 people and made pounds 7m profit in its last full year.

The acquisition trebles the size of YDC and will add a complementary supermarket own-brand dairy produce operation to YDC's existing branded offer.

John Houliston, Dairy Crest chief executive, said: "This acquisition will further strengthen our progress in building leadership positions in growing, added-value markets. Our two businesses are largely complementary and this acquisition gives Yoplait Dairy Crest the opportunity to take a strong leadership position across the market."

Finance director Ian Laurie said the acquisition would be modestly earnings- enhancing in its first year. "Clearly we expect to grow that profit," he said.

Mr Laurie said Dairy Crest would provide pounds 30m of the pounds 66.25m Raines price tag but once the joint venture was "geared up" that outlay would be reduced to about pounds 15m.

He stressed that the earnings-enhancing effect of the deal would not come from job losses or rationalisation but through the synergies that existed between YDC's existing business and Raines.

"It gives the combined business a strong position in the large and growing fresh dairy products sector," he said.

The fresh dairy products sector is worth about pounds 1bn and is growing at about 10 per cent a year.

Dairy Crest also announced this morning it had negotiated an extension to YDC. YDC was formed in 1991 between Dairy Crest and Yoplait's parent company, Sodiaal, and today the two groups agreed to extend the joint venture by 10 years under a rolling 10-year renewal programme.