Saputo eyeing further buys

Reuters — Canada’s largest dairy producer Saputo Inc., which recently won control of Australian dairy Warrnambool Cheese and Butter Factory Co., is hungry for further acquisitions in that country, as well as in New Zealand, Brazil and the U.S., CEO Lino Saputo Jr. said on Thursday.

Saputo gave no indication that further big purchases are imminent, however, noting that the company had considered a play for Warrnambool for the past 10 years.

“Now with Warrnambool, we have a strong, solid platform in Australia, perhaps there could be other small, tuck-in businesses in Australia,” Saputo said on a conference call to discuss quarterly results.

Saputo won majority control in January of Warrnambool, trumping separate approaches from WCB’s two largest shareholders, Australian-based Bega Cheese and Murray Goulburn Co-operative Co.

The acquisition expands Saputo’s operations beyond Canada, the U.S. and Argentina, giving it a platform to tap growing Asian demand.

Japanese beverage giant Kirin Holdings Co., which owns a 10 per cent stake in WCB through its local unit Lion, poses the last hurdle for Saputo to take full control of Warrnambool.

CEO Saputo said the company hopes to move beyond 90 per cent control by Feb. 12, when its offer for the company is scheduled to close, but if not, he said Warrnambool will be a strong subsidiary of Saputo Inc.

“Whether we have 100 per cent or 90 per cent or 80 per cent, we’re still very delighted with this transaction (and) think as a subsidiary, this could be a very good platform for us,” Saputo said.

He said the company wants to facilitate some of the plans Warrnambool has long had in place but lacked the finances to execute, and offered a vote of confidence in WCB CEO David Lord.

“I have full confidence that David can manage that division very, very well. With our financial support and perhaps some sales guidance, I think the division can flourish,” Saputo said.

For its third quarter ending Dec. 31, 2013, Saputo’s net income rose to $144.1 million, or 73 cents a share, from $130 million, or 65 cents, a year earlier.

Revenue jumped 30 per cent to $2.34 billion, factoring in its acquisition of U.S.-based Morningstar Foods in January 2013.

Analysts were expecting Saputo to earn 74 cents per share on revenue of $2.259 billion, according to Thomson Reuters I/B/E/S.

— Rod Nickel is a Reuters correspondent based in Winnipeg.

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