The Competition and Markets Authority (CMA) has given the green light to Müller UK & Ireland Group’s purchase of Dairy Crest’s dairy operation – almost a year after the plan was first revealed.
Under the approved proposal, Müller will pay in the neighbourhood of £80m for the Dairy Crest operation when the transaction concludes in late December, with the exact final figure subject to adjustment based on variances in Dairy Crest’s working capital, capital expenditure and profitability nearer the time.
A spokesman for Müller UK & Ireland Group confirmed that around 70 Dairy Crest depots and 3,500 staff would be transferred under the deal, which includes its distribution network, but told Motortransport.co.uk Müller had “no plans to close any additional DC facilities at this point”.
Dairy Crest uses third party firms for collection of milk from farms and delivery to retailers including Wincanton and Gregory Distribution. It also has 389 vehicles specified against multiple O-licences for its in-house fleet. Müller, by contrast, runs its own in-house fleet for fresh milk operations under an operating licence with authorisation for 779 vehicles - though it does use group company Culina for distribution of yoghurt and chilled desserts. The combined operation will run 1,118 vehicles.
“Our principle is that wherever possible, we use our own vehicles but that doesn’t mean we wouldn’t outsource from time to time,” the Müller spokesman told us.
John Gregory, chief executive of Gregory Distribution, said the acquisition “won’t make any difference” to its farm collections for the Dairy Crest operation but declined to comment further. Wincanton, which only a couple of months ago struck a further three-year deal with Dairy Crest to collect nearly a billion litres of milk a year, had not responded to our request for comment at the time of writing.
Dairy Crest’s dairy operations have suffered as a result of fluctuating dairy commodity prices of late. In 2014-2015, they generated turnover of £881m (66% of the firm’s total) but just £1.8m of profit (3% of the total), after property profits of £17.6m arising from the sale of some distribution depots only narrowly outweighed a trading loss.
