Dairy co-op Milk Link has taken full control of The Cheese Company in a £47m deal.
The business, now the UK’s largest cheese producer, was formed in 2004 following Milk Link’s purchase of Irish food firm Glanbia’s UK cheese operations.
Glanbia, however, retained a 25% stake in the new venture as well as providing loan notes worth £35m. These were to be repaid by 2012.
Milk Link has now acquired that 25% as well as repaying the loan notes for a discounted £28.8m.
John Moloney, Glanbia’s group managing director, said: “We consider now to be an appropriate time to dispose of our remaining interest and to focus on the development of our fast growing international businesses.” The deal was backed by Barclays, Lloyds TSB and Rabobank.
Barry Nicholls, Milk Link chief executive, said the move would give the business total control of The Cheese Company’s strategic direction and distribution of its profits.
As part of the original joint venture deal restrictions were put in place to safeguard Glanbia’s position.These included a restriction on the distribution of profits until the loan notes were repaid.
The ability to distribute profits how it saw fit was good news for the co-op’s 2000 members, said Mr Nicholls.
“The fact that three major banks were keen to finance the deal on much-improved terms demonstrates our increasing financial strength and confidence in our long-term strategy.”
Latest figures for the Cheese Company show that it made a pre-tax profit of £5.6m for the year-ended 1 April 2006, compared with a £3.6m loss the previous year.
How profits would be distributed to farmers would be decided at a council meeting at the end of January, said corporate affairs director Will Sanderson.
Options could include a dividend payment, higher milk prices or removing the existing 0.5p/litre levy, he said.
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