Dairy Crest planning to sell St Hubert brand

Dairy Crest Group PLC have said that they are looking to sell their French branded spread line, St Hubert, in a deal that experts think could fetch the dairy food company around £300m.

The potential sale of the spread business, which many analysts see as the jewel in the crown of the Dairy Crest company, would possibly also help them to reduce their debts and be able to focus on their core business in the UK.

The announcement from the company comes at a time when consumer firms in Britain, who are currently battling against soaring commodity costs, are in a tough position as the ever rising inflation is affecting the living standards of Brits and making them struggle to meet constant price rises.

Since they acquired the Hubert brand in January of 2007, Dairy Crest have failed to make any more deals within continental Europe as it had planned to, according to a statement released by the makers of Cathedral City cheese. The plans to complete further deals within continental Europe had failed due to family run businesses being hard to secure, the constraints of their balance sheet and by their rivals Lactalis snapping up what was available.

The possible sale of St Hubert wouldn’t only reduce the debts of Dairy Crest, but would also allow them to make more strategic deals within the UK. Nicola Mallard is an analyst with Investec Bank, and she says that is it a very profitable business which in that respect makes it very salesworthy. She added that she expected to see the bulk of Dairy Crest’s net debt disappear if they did sell it.

As at the 30th September 2011, the group’s net debt was around £365.3m. It paid about £250m for St Hubert to Uniq, who where then bought Greencore, the Irish food company, last year.