Farmers set to transfer to Muller after £80 million deal with Dairy Crest

Market Drayton-based Muller has agreed an £80 million deal for the dairy operations of Dairy Crest, subject to approval from the competition authorities.

It will see it take over its butter brand Country Life and the Frijj milkshake line, as well as four factories and 72 depots around the country.

The agreement will also see 700 farmers move their supplies to Muller, while remaining on the contracts agreed with Dairy Crest, bringing the total number of UK farmers selling their produce to the yoghurts giant to around 2,000.

And Heiner Kamps, chief executive of Muller's parent company, said: "This acquisition underlines our ambition to further grow in core markets and it extends our position as an increasingly important competitor in the dairy sector.

Muller says it is too early to say how the operations of the two companies will be merged, or whether the new £17 million Market Drayton butter plant will carry any of the responsibility for manufacturing Country Life.

The company said it will be "business as usual" until full approval for the deal has been secured, which could take up to a year.

Muller took on Robert Wiseman Dairies in 2012 in a £280 million deal that saw the UK business completely rebranded, built a major new butter factory in Market Drayton at a cost of £17 million, took over Nom's premises in Telford last year, and has taken over the former Uniq factory in Minsterley.

At present, 1,100 dairy farmers supply their milk to Dairy Crest. Of those, 400 will be retained to continue supplying to the remainder of the business, while 700 will begin supplying to Muller, taking the total number of producers selling milk to the group to almost 2,000.

However, Muller says they will remain on their current contracts for the foreseeable future.

The move will allow Dairy Crest to focus on its cheese and spreads operation, which include brands such as Clover margarine and Cathedral City cheddar, and which recorded revenues of £442 million and profits of £56.1 million last year.

The company is in the process of closing its spreads facility at Crudgington, between Market Drayton and Telford, although it is investing £4 million in building a new food innovation centre at Harper Adams University near Newport, where it will employ around 40 staff.

The sale was announced as Surrey-based Dairy Crest reported a 95 per cent slide in half-year profits to £900,000, dragged down by volatile milk prices and the cost of plant closures. Revenues rose one per cent to £682.1 million.

The sale includes factories in Foston, Chadwell Heath and Severnside as well as the Hanworth glass bottling site, where Dairy Crest is already consulting with employees about the site's future.

Dairy Crest chief executive Mark Allen added: "Dairy Crest is very proud of the dairy business it has built and we are delighted that it will be combined with Müller Wiseman Dairies' equally well-established operation.

"This proposed sale is a great opportunity for our two companies, our farmers, our staff, our customers and consumers.

"Completing this transaction would be a positive development for Dairy Crest and for the UK dairy industry. The combination of our Dairies operations with those of Müller Wiseman Dairies will create efficiencies and economies of scale that will help to create a more sustainable UK dairy sector that is better placed to compete on the global stage."

Muller UK employs 6,000 people across four businesses, including around 1,000 in Shropshire, and it includes a fresh milk distribution network across the UK.

The company buys milk from more than 1,200 British dairy farmers.

Dairy Crest's main Shropshire milk supply depot on the Halesfield Industrial Estate in Telford closed almost a year ago.