MONTREAL-Reacting to a WTO export barricade, and a need to serve expanding global pizza customers, Saputo Inc. is buying the third-largest dairy company in Argentina to serve as a springboard for global exports.
The Montreal-based company said last month it will pay $68 million (CAN) to acquire two plants run by Molinos Rio de la Plata S.A. The plants have 850 workers and annual sales of $120 million, of which 40% are exports. Saputo, had been seeking an international platform since a World Trade Organization ruling last year prohibited Canadian cheese exports because of government control over milk prices.
The deal would give Saputo access to cheaper and abundant milk resources, said an analyst, noting that while the United States does not have a quota system, there is a floor price for milk.
Lino Saputo Jr., who is gradually taking the reins of the company from his father, said Saputo Inc. has Canadian customers, primarily pizza makers, who have expanded into Mexico and Asia.
"So we wanted to be in a country that allows us the opportunity to follow our customers all over the world," Saputo told a Canadian newspaper. He said there is also room for expansion within Argentina. The company to be acquired has just 6% of the country's fluid milk market.