Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<a href="https://www.smartkarma.com/entities/25165" target="_blank" data-smartkarma-citation="entities:25165:1">Saputo Inc (SAP CN)</a> and <a href="https://www.smartkarma.com/entities/21895" target="_blank" data-smartkarma-citation="entities:21895:1">Dairy Crest (DCG LN)</a> today announced an all-cash deal where Saputo will buy Dairy Crest for 620p/share, to be implemented through a Scheme of Arrangement which the two parties say is likely to close in Q2 2019.
Saputo is a Canada-listed dairy company which has grown through serial acquisition - more than 30 acquisitions in the last twenty years - but curiously none of the acquisitions have left it with any operations in the UK. Dairy Crest is a leading UK-based dairy and cooking staples company whose best-known products are Cathedral City Cheddar Cheese, Clover margarine, Country Life butter, and Frylight cooking oil as well as other minor butter-similars and butter-replacement spreads.
This would be Saputo's largest purchase in ten years - by a factor of three over their second largest - the purchase of Warrnambool Cheese &amp; Butter Factory in Q1 2014.
Shares are trading through terms early, perhaps on expectations the wide open register means shareholders can try to hold out for a higher price. 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/079/855/original/more.gif?1550843799" class="editor-image img-responsive" data-smartkarma-image-id="79855"></figure>
At a decent premium (13.9x TTM EV/EBITDA at 620p) to where the rest of the smaller-cap dairy products sector trades (below 10x on a median basis), and the highest EV/Revenue or EV/EBITDA multiple that I can find Saputo having paid, asking for more may not get you more, but investors clearly think it worth a try. 
An extra 10% would clear out most of the naysayers who bought in the frothier "we're going to be an asset-light branded goods company" days of 2015-2017. It would put March 2019 PER at just under 20x and just under 13.9x March 2019 expected EV/EBITDA.

Saputo Inc (SAP CN) and Dairy Crest (DCG LN) today announced an all-cash deal where Saputo will buy Dairy Crest for 620p/share, to be implemented through a Scheme of Arrangement which the two parties say is likely to close in Q2 2019.
Saputo is a Canada-listed dairy company which has grown through serial acquisition - more than 30 acquisitions in the last twenty years - but curiously none of the acquisitions have left it with any operations in the UK. Dairy Crest is a leading UK-based dairy and cooking staples company whose best-known products are Cathedral City Cheddar Cheese, Clover margarine, Country Life butter, and Frylight cooking oil as well as other minor butter-similars and butter-replacement spreads.
This would be Saputo's largest purchase in ten years - by a factor of three over their second largest - the purchase of Warrnambool Cheese &amp; Butter Factory in Q1 2014.
Shares are trading through terms early, perhaps on expectations the wide open register means shareholders can try to hold out for a higher price. 

At a decent premium (13.9x TTM EV/EBITDA at 620p) to where the rest of the smaller-cap dairy products sector trades (below 10x on a median basis), and the highest EV/Revenue or EV/EBITDA multiple that I can find Saputo having paid, asking for more may not get you more, but investors clearly think it worth a try. 
An extra 10% would clear out most of the naysayers who bought in the frothier "we're going to be an asset-light branded goods company" days of 2015-2017. It would put March 2019 PER at just under 20x and just under 13.9x March 2019 expected EV/EBITDA.

Saputo to Buy Dairy Crest; Initial Market Response Wants a Bump

David Blennerhassett

Last week, beleaguered <a href="https://www.smartkarma.com/entities/605" target="_blank" data-smartkarma-citation="entities:605:1">Mg Unit Trust (MGC AU)</a> announced an <a href="http://www.asx.com.au/asxpdf/20171027/pdf/43nmsfl1l78rrt.pdf" target="_blank">agreement</a> with <a href="https://www.smartkarma.com/entities/25165" target="_blank" data-smartkarma-citation="entities:25165:1">Saputo Inc (SAP CN)</a>, one that befits the internal/external issues faced by the dairy company.The binding agreement comprises an estimated A$0.75 per share/unit distribution at the completion of the transaction (first half 2018); with upwards of a further $0.40 per share/unit once various legal issues are resolved. That last distribution could take years.This is not a great outcome for investors, some who have watched their investment halve from the July 2015 IPO price of A$2.10 (A$0.1259/share in grossed-up franked divs have been paid). But it is a win for farmers who will receive a step up in payments, plus a loyalty payment, a tolerable balm to the April 2016 <a href="http://www.asx.com.au/asxpdf/20160427/pdf/436rx32r4kdvst.pdf" target="_blank">step-down</a>, a management decision that retrospectively cut milk prices, and directly manifested into the current legal proceedings.Optically, pricing looks reasonable and should be balanced with shareholder and regulatory approvals, and a long-dated completion date for final distribution(s). Shares initially popped to $0.95 on the announcement before retreating back below $0.80 this week as the mechanics of the agreement sunk in.More below the fold...

Last week, beleaguered Mg Unit Trust (MGC AU) announced an agreement with Saputo Inc (SAP CN), one that befits the internal/external issues faced by the dairy company.The binding agreement comprises an estimated A$0.75 per share/unit distribution at the completion of the transaction (first half 2018); with upwards of a further $0.40 per share/unit once various legal issues are resolved. That last distribution could take years.This is not a great outcome for investors, some who have watched their investment halve from the July 2015 IPO price of A$2.10 (A$0.1259/share in grossed-up franked divs have been paid). But it is a win for farmers who will receive a step up in payments, plus a loyalty payment, a tolerable balm to the April 2016 step-down, a management decision that retrospectively cut milk prices, and directly manifested into the current legal proceedings.Optically, pricing looks reasonable and should be balanced with shareholder and regulatory approvals, and a long-dated completion date for final distribution(s). Shares initially popped to $0.95 on the announcement before retreating back below $0.80 this week as the mechanics of the agreement sunk in.More below the fold...

Canada

Premium Brands Holdings Corp. is a food processing company with manufacturing facilities in Canada and the United States. The Company markets branded specialty processed meats, pre-packaged sandwiches and burgers, and frozen foods.  Premium Brands provides products to food service, retail, and wholesale customers in Canada and the United States.

Maple Leaf Foods Inc. manufactures and sells a variety of food products. The Company's products include fresh and prepared meats, poultry, flours, pasta, seafood, and pet and animal feeds. These products are primarily sold to retail, food service, wholesale, agricultural and industrial customers worldwide.

Lassonde Industries Inc. manufactures, processes, packages, and markets food products.  The Company's products include fruit juices, fondue bouillons and sauces, citrus drinks, barbecue sauces, meat marinades, and baked beans. Lassonde's brand names include Rougemont, Oasis, and Fruite.

Rogers Sugar, Inc. manufactures and distributes sugar.  The Company produces granulated, icing, cube, yellow and brown sugars, liquid sugars and specialty syrups.  Rogers produces sugar from sugar cane and sugar beets.

SunOpta Inc. owns and operates businesses in the natural and organic food markets. The Company sources, processes, and distributes natural and organic food products. SunOpta also produces, distributes, and recycles environmentally friendly industrial materials. In addition, the Company engineers and markets clean pulping systems.

High Liner Foods Inc. is a North American processor and marketer of prepared, value-added frozen seafood. The Company's branded products are sold throughout the United States, Canada and Mexico to grocer and club stores as well as restaurants and institutions.

Molson Coors Canada Inc. is the principal operating unit of Molson Coors Brewing Company's business operations in Canada.

Corby Spirit and Wine Limited markets a variety of spirits and wines.  The Company distills liqueur, whisky, wine, vodka, rum, gin, brandy, cognac, and ready-to-drink cocktails, as well as other spirits.

Metro Inc. distributes food and pharmaceutical products. The Company operates a network of food stores and drug stores in the provinces of Quebec and Ontario.

Empire Company Limited is a diversified company.  The Company's key businesses include food distribution, real estate, and corporate investment activities.

China Mengniu Dairy Company Limited, through its subsidiaries, manufactures and distributes quality dairy products in China. The principal products are liquid milk products, ice cream, and other dairy products, such as milk powder. The Company markets its products under its primary MENGNIU core brand.

Want Want China Holdings Limited manufactures and trades rice crackers, snack food, beverages, and packing materials.  The Company also manufactures wheat, flour, and raw materials for the manufacture of snack foods.  Most of the company's production facilities are located in China and Taiwan.

Ingredion Incorporated refines corn and produces sweeteners and starches.  The Company has customers in a wide range of industries, including the food, soft drink, brewing, pharmaceutical, corrugating, paper, and textile industries.  Ingredion has Company-owned operations, joint ventures, alliances, and technical licenses in countries around the world.

Pilgrim's Pride Corporation produces prepared and fresh chicken products in the United States and Mexico.  Through vertical integration, the Company controls the breeding, hatching, and growing of chickens and the processing, preparation, and packaging of its product lines.  Pilgrim's Pride exports its products to Canada, Eastern Europe, the Far East, and other world markets.

The JM Smucker Company manufactures and markets food products on a worldwide basis. The Company's principal products include peanut butter, shortening and oils, fruit spreads, canned milk, baking mixes and ready-to-spread frostings, flour and baking ingredients, juices and beverages, frozen sandwiches, dessert toppings, syrups, pickles and condiments, and potato side dishes.

KIKKOMAN CORPORATION produces and markets soy sauce, alcoholic beverages, and other food products.  The Company has marketing rights for Del Monte brand products outside of the United States.  Kikkoman also operates restaurants in Japan and other countries.

NISSIN FOODS HOLDINGS CO.,LTD. produces instant noodle and processed food products.  The Company also develops pharmaceuticals.  NISSIN FOODS operates production facilities in overseas countries including Hong Kong, India, U.S., Singapore, and other countries.

Ruchi Soya Industries Limited manufactures soybean oil, vanaspati vegetable fat, texturized soya protein, soya flour and other soya products.  The Group has also developed Palm stearin and Palm olein cooking oils.

WH Group Limited operates as a holdings company. The Company, through its subsidiaries, provides meat processing services, supplies chilled meat, meat products, and other related products.

Tingyi (Cayman Islands) Holding Corporation, through its subsidiaries, manufactures and sells instant noodles, baked goods, and beverages in China.

Saputo Inc. manufactures dairy and grocery products.  The Company manufactures Italian cheeses, European cheeses, and North American cheeses.  Saputo also operates a distribution network through which it markets a variety of imported cheeses and non-dairy products to complement its cheese offerings.  The Company also produces and distributes snack cakes, cookies, breads, and soups.

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Saputo (SAP CN)

Saputo to Buy Dairy Crest; Initial Market Response Wants a Bump

Saputo Inc (SAP CN) and Dairy Crest (DCG LN) today announced an all-cash deal where Saputo will buy Dairy Crest for 620p/share, to be implemented...

Travis Lundy

Murray Goulburn - Saputo Steps Up

Last week, beleaguered Mg Unit Trust (MGC AU) announced an agreement with Saputo Inc (SAP CN), one that befits the internal/external issues faced...

David Blennerhassett

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