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Saputo buys Morningstar for $1.45 billion

Staff writer |
Canadian dairy producer Saputo Inc. said that it has agreed to buy Morningstar, a subsidiary of Dean Foods Company, for $1.45 billion. The combined business will have approximately 12,000 employees and 57 manufacturing facilities in five countries.

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Morningstar produces a variety of dairy and non-dairy extended shelf-life products, including creams and creamers, ice cream mixes, whipping cream, aerosol whipped toppings, iced coffee, half and half, value-added milks, as well as cultured products such as sour cream and cottage cheese. These products are manufactured under a wide array of private labels and owned brands, and are sold nationwide through an internal sales force and independent brokers.

Morningstar serves the needs of retailers, national quick-serve restaurant chains, grocery stores, mass merchandisers and distributors across the United States. Morningstar has approximately 2,000 employees and operates 10 manufacturing facilities located in nine states. The purchase will be financed through a newly committed bank loan and is expected to be closed by the end of December 2012.

Morningstar reported its third-quarter 2012 financial results on October 24: the consolidated revenue was $161 million in Q3 2012, a 0.6% increase from $160.1 million in the third quarter of the last year. Consolidated operating income was $39.9 million, an increase of 17.7% compared with $33.9 million in the same period a year ago, and net income was $27.1 million, or 56 cents per diluted share, compared with $21.4 million, or 42 cents per diluted share, in the Q3 2011. The net purchase price represents for Saputo Inc. a multiple of 7.9x Morningstar's EBITDA.

Canadian company expects the transaction to be immediately accretive to earnings Through this acquisition, Saputo will benefit from Morningstar’s national manufacturing and distribution footprint and will optimize coast-to-coast service. This transaction will expand product offering to customers in the United States and broaden the range of Saputo’s future acquisition opportunities.


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