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Davis: Sale positions Davisco Foods for growth

Carol Ryan Dumas

Capital Press

Davisco's CEO saysthe sale of the dairy processors' assets to Canadian Agropur was a business move to continue to grow operations and offer more opportunity to their employees.

Davisco Foods International, a privately held business owned by the Davis family and headquartered in Le Sueur, Minn., has sold it cheese and dairy-food-ingredient business to Agropur, Canada’s largest dairy cooperative.

“It’s an opportunity to partner with someone we feel is a lot like us — a big company that acts like a small company,” said Davisco CEO Jon Davis, grandson of Davisco founder Stanley Davis.

Davisco didn’t have to sell but wanted to continue to grow and expand and offer opportunity for its employees, he said.

“It was a business decision based on business. It was the right time for the business to look at an opportunity to grow,” Davis said.

In this age of consolidation in the dairy industry, size and scope matter in being competitive going forward. It offers an opportunity for everyone, including Davisco’s milk suppliers and employees, he said.

Consolidation is happening in many industries and although it sounds like an economics class, efficiencies in size and economics is real, he said.

Davis will remain as manager of the Davisco division under Agropur, retaining the same management team and employees, he said.

“They’re buying us because we’re good at what we do, and they’re not interested in messing with success,” he said.

Davisco processes 3.8 billion pounds of milk and produces more than 375 million pound of cheese and 180 million pounds of whey ingredients annually, about half at its plant in Jerome, Idaho. It has 900 employees, with about 300 at the Jerome facility, Davis said.

Agropur’s acquisition includes three Davisco cheese processing factories in Jerome, Le Sueur, Minn., and Lake Norden. S.D. It also includes an ingredients plant in Nicollet, Minn., a cheese shop in Le Sueur, and sales offices in the U.S. and abroad.

The transaction will double Agropur’s U.S. processing operations and will increase its global milk intake by 50 percent. It will also strengthen its position in the North American and international dairy industries, Agropur stated in a press release on Tuesday.

“With over $1 billion in annual sales, this acquisition is by far the largest transaction in Agropur 76 year history,” Serge Riendeau, president of Agropur, said in the release.

The transaction, combined with the most recent ones in Canada, will increase Agropur’s sales to over $5.4 billion on an annualized basis, and the company should reach 12.1 billion pounds of milk processed each year in 41 plants across North America, the company stated.

Davisco employees were informed of the sale on Tuesday, and naturally there were concerns. But after explanation, employees were comfortable and even excited about their own opportunity for growth, Davis said.

“We will never know if the timing was perfect, but it happened because we are comfortable with what (Agropur is) all about and the way they treat people,” he said.

Agropur operates a lot like Davisco, with a similar culture and a DNA/family component. The company treats people right and cares about its clients and employees, he said.

Davisco has been in operation for 71 years, and its employees are family friends, he said.

“We’re not going to risk that or their livelihoods,” he said.

The acquisition, at an undisclosed amount, is targeted to close Aug. 1, Davis said.

Online

Agropur: www.agropur.com



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