Scotsburn Co-operative Services Limited today announced it has an agreement with Saputo Inc. that will see the largest dairy processor in Canada acquire Scotsburn’s fluid milk activities, including the facilities in Sydney, Nova Scotia, and Mount Pearl, Newfoundland and Labrador, as well as the fluid milk distribution network in Atlantic Canada.
“This wasn’t an easy decision to make, as fluid milk has been a core part of Scotsburn’s business since the mid 1960s,” said Doug Ettinger, President and Chief Executive Officer of Scotsburn. “Where it has become more difficult for regional players to remain competitive in Atlantic Canada, this transaction will accelerate Scotsburn’s growth strategy on ice cream. Our milk business will realize its full potential and be positioned for success as part of Saputo – a company with an efficient processing and distribution network for fluid milk across Canada.”
The purchase price of the Saputo transaction is $61 million in cash, which excludes about $8 million of working capital items. Specific details will be communicated to Scotsburn Co-operative members directly in advance of a vote on the agreement, which is expected later this month. Closing of the transaction is subject to satisfaction of relevant regulatory approvals, which includes approval from the Competition Bureau of Canada.
Scotsburn and Saputo will be working closely with the employees of the fluid milk business to ensure a smooth transition. Final closing of the transaction is expected to occur around March 2014.
“By changing our business model, Scotsburn is acting on a tremendous opportunity to build on our growth as a leading ice cream producer and supplier across Canada,” said Ettinger. “Increasing Scotsburn’s focus on ice cream also opens the door to growth throughout North America. This is good news for Scotsburn shareholders as this direction will result in strong returns for our co-operative members here in Atlantic Canada.”