Canadian-based dairy producer Saputo recently announced plans to purchase the Morningstar unit of Dean Foods for a staggering $1.45 billion in an effort to increase their footing in the U.S. sector. This deal came as a surprise for most analysts, as the $1.45 billion buyout price is estimated to be eight times more than the annual earrings of Morningstar. However, Saputo is hoping this new acquisition will allow them to take a greater share of the U.S. dairy market.
You might be surprised to hear that Saputo is already one of the world’s biggest dairy producers. Along with various types of cheese, they also make milk, yogurt, ice cream and several other dairy-based products. On the other hand, Dean Foods Morningstar is a company that focuses most of their production on both dairy and non-dairy products, such as coffee creamers, half and half, ice creams, whipped cream, sour cream and several different types of cheeses.
To put things into perspective on just how large of a deal this is, you have to look at the employment numbers of these two companies. With Saputo and Dean Foods Morningstar combined, they will employ roughly 12,000 workers in five different countries. Of course this number will likely grow as their business remains on a steady upwards growth. Once the two companies are combined, they will likely develop a larger client base, which means a greater amount of sales and revenue generates for the powerhouse company.
According to reports, Dean Foods Morningstar grossed $1.6 billion in revenue in their 9 factories spread across the U.S. With this new acquisition under Saputo’s belt, the company will increase their own revenue by a significant amount. Morningstar’s president Kevin Yost released a statement earlier with a positive attitude regarding the buyout by Saputo. In short, he said the company’s goal of providing excellent customer service combined with their cost-cutting techniques have led to the success of Morningstar, and that the company was looking forward to working with Saputo in the future.
Although news of this deal has already been made of official, it won’t be finalized until the beginning of next year, leaving some employees skeptical of what’s to come. However, Saputo has assured current employees that their jobs are safe and business will continue as usual. Once the deal is over, though, changes are inevitable, and some people will feel these changes more than others.