Saputo, Michael Foods Vie for Dean Foods Unit

By CnAgri Print

Canadian dairy products maker Saputo Inc. and U.S.-based Michael Foods are competing to buy Dean Foods Co's Morningstar dairy division, people familiar with the matter said, in a deal that could fetch between $1 billion and $1.5 billion.

According to Reuters, Saputo and Michael Foods have emerged as frontrunners in the auction as the process reaches a final stage, prevailing over other bidders including Mexican dairy company Grupo Lala and private equity firm Apollo Global Management LLC, three people said on Thursday.

Dean Foods, the largest U.S. dairy company, has received final bids for the Morningstar unit and aims to announce a deal in the next few weeks, the people said, asking not to be named because the matter is not public.

Morningstar makes creams, coffee creamers and other dairy products mostly under private label or store brands, and also sells Friendship cottage cheese.

Montreal, Quebec-based Saputo, which has a market value of around $9 billion, was founded as a cheese store in 1954 by Italian immigrant Giuseppe Saputo, and now ranks as one of the world's largest dairy companies selling cheese, baked goods and milk.

Michael Foods is owned by GS Capital Partners, the private equity arm of Goldman Sachs Group (GS.N), and sells egg and dairy products, refrigerated grocery and potato products, reports Reuters.

In September, Dean Foods confirmed a Reuters report that it was seeking a buyer for Morningstar, a move that could presage a breakup of the largest dairy company in the United States.