Donegal Creameries shakes it up with an £18m milk processing deal
Donegal Creameries is to sell its milk processing and retail business in a deal worth up to €21m (£18.4m).
The businesses will be sold to co-op Connacht Gold for €13.5m (£11.6m) in cash, with another €7.4m (£6.5m) due if the two divisions hit certain performance targets by the end of next year.
The sale comes as little surprise, with talks having gone on since at least late August.
The company also sells farm supplies and general hardware in 11 stores, of which two are in Lisnaskea, Co Fermanagh and Omagh, Co Tyrone.
Last year, the businesses had turnover of €69.3m (£60.8m), with net profits of €1.85m (£1.6m).
The size of the deal surprised some market watchers, who had previously estimated the businesses would be worth between €10m (£8.8m) and €13m (£11.4m).
Donegal Creameries managing director Ian Ireland said: “Donegal have been a keen supporter of the need to develop a long-term sustainable future for the dairy industry in Ireland and we believe the sale of our milk business to our neighbouring milk processor will enhance the future for all stakeholders in our milk business.”
Donegal’s milk is supplied by farmers in Northern Ireland and in the Republic.
Mr Ireland added: “The combination of Donegal and Connacht’s milk businesses will provide the market with a leading specialist producer in the Republic of Ireland with a well developed sales and distribution network.
“Donegal believe that Connacht will be good owners of its milk and stores businesses and we wish them every success for the future.”