Dairy Crest, more than butter

Britain's biggest dairy products firm Dairy Crest group is poised to buy St Ivel spreads from Uniq for £50-60 million pounds (€79-95 million), to rival UK market leader Unilever, industry sources said on Thursday.

Dairy Crest, which already owns the Clover dairy spread brand, is looking to buy the Uniq business that makes Utterly Butterly, Vitalite, Gold and Golden Churn spreads and Uniq's processing plant at Liverpool, in north-west England.

Dairy Crest sent a team at the end of August to visit the Uniq plant in the Kirkby area of Liverpool which employs around 175 people, and hopes to hammer out a deal which could be announced within weeks, the sources added.

"When the business was put up for sale in June, Dairy Crest was the only real buyer. The delay is only haggling over the price,"​ said one source close to the talks.

Dairy Crest and Uniq declined to comment.

Uniq appointed investment bank Lazard to sell both its spread and yoghurts business and after announcing a yoghurts deal in August, the company and its advisers hope to announce a spreads sale soon and complete a deal by the end of the year.

Dairy Crest is keen to add this profitable growing business to its portfolio and become a strong viable competitor to UK market leader Unilever with its Flora, Stork and Olivio brands in the supermarket cooler cabinet.

Analysts said the spreads business would make a good fit and, depending on the price, could create value for the shareholders of Dairy Crest, which has made a number of add-on acquisitions since the group's flotation in 1996.

The past performance of the two groups has been markedly different. While Dairy Crest shares have outperformed the FTSE 100 index by over 100 per cent since its float, Uniq shares have underperformed by 55 per cent over the same time scale.

Uniq shares rose 2.4 per cent, or four pence, to 171p, while Dairy Crest shares slipped 0.9 per cent at 399-1/2p by 1040 GMT.

In June, Uniq put its spreads and yoghurt business up for sale to try and turn the struggling company around by selling its branded businesses and becoming a pure supplier of supermarket own label and franchised products.

At the same time, Dairy Crest's then chief executive John Houliston who retired in July, said the group will be taking a long, cool look at the Uniq spreads business, amongst a number of acquisition options. Dairy Crest bought Uniq's Unigate milk and cheese operation for 250 million pounds in July 2000.

Houliston had been successful at focusing the group on growing added value areas of the dairy sector such as Cathedral City mature cheddar, Frijj flavoured milk drinks and Petits Filous and Frubes yoghurts and fromage frais.

Uniq's new chief executive Bill Ronald, who took over in February, sold the Shape yoghurts business to France's Groupe Danone for £32 million in August, and said he would complete the spreads sale by the end of the year.

Ronald has been trying to change the fortunes of Uniq, formerly known as Unigate, which was a leading FTSE 100 stock a decade ago, but has sunk under a series of profit warnings and management blunders which has seen the group operate under four chief executives in the last 21 months.