Dean Foods Selling Morningstar Foods for $1.45 Billion

On Monday, Dean Foods (NYSE: DF  ) announced an agreement to sell its Morningstar Foods division to Canadian dairy foods concern Saputo for $1.45 billion. Morningstar Foods manufactures 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.

After taxes and expenses, Dean Foods expects to net $887 million from the sale of this division and to apply "substantially all of the net proceeds" to paying down its $3.3 billion long-term debt.

To facilitate the sale, Morningstar Foods has separately entered into an agreement with WhiteWave Foods (NYSE: WWAV  ) , a controlled subsidiary of the company, to purchase certain assets for $60 million, net of taxes. WhiteWave is simultaneously terminating an option to purchase plant capacity and property at a Morningstar facility that will be acquired by Saputo.

Post-sale, WhiteWave says it "will continue its business relationship with Saputo pursuant to which Saputo manufactures and sells WhiteWave products in Canada." WhiteWave said it will use money from the sale to reduce debt.

Morningstar has about 2,000 employees and operates 10 manufacturing facilities in nine states. In the year ended Sept. 30, it had revenues of about $1.6 billion.


 

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