Dairy Crest has bought the lion's share of Unigate's dairy business in a £220m deal. It makes DC the largest single buyer of raw milk in England and Wales with 3bn litres a year ­ more than 22% of total output. The price tag includes £100m of Unigate debt and a 75.7 million share issue, securing Unigate's doorstep and retail liquid milk business, as well as cheese and butter facilities. Unigate will retain the St Ivel brand portfolio which includes Shape, Gold and Utterly Butterly. But Unigate chief executive Sir Ross Buckland dismissed suggestions that it would make the remaining parts of Unigate more vulnerable to takeover bids. "Even at our highest market capitalisation of about £1.7bn, we could have been bought by any one of a number of people." Both Unigate and the venture capital firm Candover have denied reports that a takeover bid is being prepared for what remains of the company in the wake of its disposals to Dairy Crest. An NFU spokesman said of the Dairy Crest deal: "Given the amount of consolidation in the UK industry, there was going to be a merger of this size sooner or later." But he observed that the merger was in sharp contrast to Milk Marque's break up into three regional bodies. The announcement falls during a sensitive negotiating period for the regional milk producer co-ops, but the full effect on Dairy Crest's future buying policy is not expected to be seen in the current buying activity. Chief executive John Houliston said: "The first major tranche of benefits will come from the removal of duplicate functions. These are highly compatible businesses." Dairy Crest expects to make savings of about £25m by 2003 by removing duplication in two very similar business structures. DC predicts "several hundred" job losses out of a total of 9,000 staff. {{NEWS }}

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