Golden Vale buys UK cheese Co

By Paul Meade

Golden Vale has acquired Dairyborn Foods Ltd, a leading UK producers of innovative cheese based products for the manufacturing and food service markets.

The business is an excellent integration for the Golden Vale existing cheese businesses.

The cost of the acquisition is Stg£8.5m (euro 12.3m) plus the possibility of a further Stg£2m (euro 2.9m) payable on a deferred basis depending on the achievement of certain profit targets to the year ending December 1999.

The initial payment of Stg£8.5m is made equally in loan notes and cash while the deferred payment will be paid via 60 per cent loan notes and 40 per cent cash.

According to the statement, Dairyborn had an audited turnover of Stg£14m (euro20.4m) and a profit before tax of Stg£1.1m (euro 1.6m) for the year ending September 1998. Net assets amounted to Stg£1.2m (euro 1.7m) and Dairyborn had debt of just Stg£100,000 at that date.

This equates to a pre tax profit margin for Dairyborn of 7.8 percent reflecting the position of the company's products in the cheese market sector. The high margin achieved in Dairgborn is reflected in the purchase price with Golden Vale paying between 8 and 9.5 times earnings at the pre tax level.

According to GV, the acquisition will consolidate its position as a leading supplier to the EU's cheese market and in particular it will enhance the Group's cheese solution business.

About 90 people are employed at Dairyborn and the plant is based in Luton. The main customers are ready meal manufacturers, and convenience food producers in the UK. About 250 types of cheese components are produced ranging from grated, sliced, diced, cheese shapes, creamed cheese and toppings.