Dairy Crest Group has said it was looking to sell its French branded spreads business, St Hubert, in a deal that analysts expect could fetch the dairy foods company about 300 million pounds.
A potential sale of the spreads business, considered by analysts the ‘jewel in the crown’ of Dairy Crest, could also help the company reduce debt and focus on its core UK business.
The company’s announcement comes at a time when British consumer firms, which are trying to battle soaring commodity costs, are in a tough situation as rising inflation squeezes Britons’ living standards and makes them more sensitive to price hikes.
Since acquiring the Hubert business in January 2007, Dairy Crest had been unable to make additional deals in Continental Europe as it had planned earlier, the maker of Cathedral City cheese said in a statement.
The group’s plan to do further deals in Continental Europe had fallen flat as family-run businesses were hard to secure, its own balance sheet was constrained and rival Lactalis was snapping up much of what was on offer, Numis analyst Charles Pick said. A possible sale would not just reduce Dairy Crest’s debt, but also help the company make strategic deals in the UK.