Saputo to buy Scotsburn fluid milk business

Quebec dairy giant Saputo plans to buy its way further into Atlantic Canada’s milk market with the fluid milk business of regional dairy co-op Scotsburn.

Saputo on Friday announced a cash deal to buy Scotsburn Co-operative Services’ fluid milk operations for $61 million, pending a vote by Scotsburn members and approval from the federal Competition Bureau.

The deal, for which the purchase price excludes about $8 million in working capital items, is expected to close in March.

Nova Scotia-based Scotsburn would then continue in its other dairy- and non-dairy-related processing businesses, such as ice cream, frozen desserts and novelties, fruit juices and bottled water.

The co-op’s fluid milk operations include milk processing plants at Sydney, N.S. and Mount Pearl, Nfld., together employing about 400 people.

The plants’ operations include manufacturing, marketing and distributing products such as fluid milk, cream, sour cream, ice cream mix and cottage cheese, mainly under the Scotsburn brand.

The co-op’s fluid milk business yields sales of about $160 million a year and about $8 million in EBITDA (earnings before interest, taxes, depreciation and amortization), Saputo said.

Saputo, whose own brands include Armstrong, Baxter, Dairyland, Neilson and Nutrilait, among others, said the deal will allow its Canadian dairy division to “increase its presence in Atlantic Canada.”

Saputo’s Quebec rival, dairy co-op Agropur, has recently been buying up dairy capacity in the region. Agropur in 2013 announced a merger with Farmers Co-operative Dairy, maker of the Farmers and Central Dairies brands, and bought family-owned Cook’s Dairy, maker of the Cook’s brand.

The Scotsburn co-op dates back to 1900, with the forming of the Scotsburn Creamery Co. by local farmers to set up a butter plant. The company began making retail ice cream in 1948 and bought local dairies to enter the fluid milk business in 1966.

Scotsburn has been in the frozen novelties business since 1998, when it became the first Canadian company to own and operate an ice cream glacier machine, processing such products at its St. John’s, Nfld. plant.

Scotsburn in 1999 was also the first dairy operation in Canada to launch 1.5 per cent and 0.5 per cent milk, the latter of which is still in the co-op’s product line.

The co-op said on its website that the marketplace “showed a positive responsive to the new products,” but cited a ruling by the Nova Scotia Dairy Commission that blocked any further marketing of 1.5 per cent milk. — AGCanada.com Network

Related stories:
Saputo nearing majority control of Australian dairy firm, Jan. 17, 2014
Agropur to buy Nova Scotia’s Cook’s Dairy, June 20, 2013
Agropur, Farmers Dairy to merge, Feb. 11, 2013