Dairy Crest to sell holding in Wexford Creamery

Dairy Crest looks set to sell its majority shareholding in Irish milk processor Wexford Creamery.

The company is putting together a deal that will see a 50% stake in the business handed over to supplier co-operative, Wexford Milk Producers (WMP).

The transaction, worth €9m, will see WMP’s shareholding increase from 20% to 70%. Dairy Crest will retain a 30% stake in the business and will continue to market Wexford-branded cheese in the UK, as well as handling packaging and distribution for the plant.

Dairy Crest cites two main reasons for the sale.

First, it will allow the firm to concentrate on the brands it owns in their entirety and second, it will allow the company to reduce its current high levels of borrowings. Cash from the proposed sale will be used to repay bank debt.

“Prior to the financial crisis big businesses like ours were highly geared with high levels of borrowings,” said Dairy Crest external affairs director, Arthur Reeves.

“However, our current strategy is to get that level of debt down as low as possible – the sale of Wexford will allow us to do that.”

The members of WMP are reported to be very keen to take greater control of the plant and already have the funding in place. Subject to approval by the 350-farmer co-operative, the transaction is expected to complete by the end of March.