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Muller / Dairy Crest: Views of the deal

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Like many Dairy Crest farmers, Richard Pearman said he was ‘shocked’ when he heard about the sale, but believed it was a ‘good proposal’ in the long-term.
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Farmer’s view of the deal

Like many Dairy Crest farmers, Richard Pearman said he was ‘shocked’ when he heard about the sale, but believed it was a ‘good proposal’ in the long-term.

 

He said: “There are too many processors operating at the moment and this includes in the middle ground.

 

“Muller has been very good at providing farmers with better paid contracts on liquid milk and it has a long-term vision for the sector and the business.

Lame duck

“As a non-aligned processor, we often got hammered [on milk price] and while Cathedral City has been huge for Dairy Crest, it had this lame duck liquid sector and the [financial] results have been abysmal.

 

“That is why I see this as a good move. If it has to be done I do not think there is a better link up than Muller and Dairy Crest coming together. It should produce something better for non-aligned dairy farmers.”

  • DCD director Richard Pearman runs 230 high yielding cows on 180 hectares (450 acres) near Stourbridge, West Midlands. He is a on a core formula contract.

Market analyst’s view of the deal

Dr Clive Black is head of research at Shore Capital stockbrokers:

 

“The deal is excellent from Dairy Crest’s point of view.

 

“Liquid milk is an industry which has suffered from over-capacity. Margins have been terrible and this deal creates a basis for a more profitable sector.

 

“I think £80m is a fair price. Muller will provide rational focus and the company can become more efficient.

 

“What Muller has done in recent times, including when they bought Wiseman Dairies, is create a strong multi-product dairy group in the UK. It will take time but we could see Muller and Arla making greater returns through a consolidated industry.

 

“For the industry, I think it should work well at both ends of the scale. For entrepreneurs it could be good news in time as it will provide more opportunities for focused groups in local markets.”

 

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