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

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

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

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)