Dean Foods agrees to sell
Morningstar unit to Saputo
Dec 3, 2012 9:35 AM
Dean Foods Company (NYSE: DF) has entered into a definitive agreement to sell its Morningstar Foods division to Saputo Inc for $1.45 billion.
Morningstar Foods is a manufacturer of dairy and non-dairy extended shelf-life (ESL) and cultured products, including creams and creamers, ice cream mixes, whipping cream, aerosol whipped toppings, iced coffee, half and half, value-added milks, sour cream, and cottage cheese. The agreement has been approved by the company’s board of directors.
Gregg Tanner, chief executive officer of Dean Foods, said, “Dean Foods will use substantially all of the net proceeds from the sale of Morningstar to significantly reduce outstanding debt, resulting in a stronger balance sheet and increased flexibility to execute against our strategies for our core dairy business. As we noted on our third quarter earnings call, this flexibility increases our ability to sharpen our focus on the conventional dairy business to deliver continued value to our shareholders.”
Dean Foods expects to realize $887 million in proceeds, net of taxes and expenses, as a result of this transaction.
As a condition of the sale, Dean Foods also entered into an agreement with The WhiteWave Foods Co (NYSE: WWAV), a controlled subsidiary of Dean Foods, whereby WhiteWave will receive $60 million net of taxes as consideration for termination of an option to purchase plant capacity and property at a Morningstar facility and the sale to Morningstar of certain manufacturing equipment at another Morningstar plant. WhiteWave and Morningstar agreed to modify certain terms of existing intercompany commercial agreements between the two companies.
The transaction is subject to customary closing conditions and regulatory clearances, including expiration or termination of the waiting period under the Hart-Scott-Rodino Act. It is anticipated to close in late 2012 or early in first quarter 2013.
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