Saputo Sells Cathedral City and Davidstow to Lactalis for £988m: How a Lost Bid Turned Into a Sale

Last year Saputo tried to buy Fonterra's consumer brands and lost to Lactalis. This month it sold its own British business to Lactalis instead. The price is about £988m. The parcel holds Cathedral City, Davidstow, Wensleydale, Clover and Country Life. It also holds five plants and about 1,300 staff.

Saputo agreed the deal on 14 August 2026. It should close by the end of March 2027, once regulators sign it off. Read the dates around it and the story gets sharper.

Saputo sold eight days after the good news

On 6 August Saputo reported its first quarter. Its Europe arm is the British business. Sales there fell 11% to C$283m. Lower bulk cheese volumes and lower selling prices did most of that. Profit on the company's own measure rose 10% to C$33m. The margin went from 9.5% to 11.7%.

Managers gave the credit to a better product mix and to moving cheese packing into Nuneaton. That is the sound of a fix working. Eight days later the business was sold.

One pound in seven has gone in six months

In February Saputo agreed to sell 80% of its Argentina arm to Grupo Gloria. That business made about C$1.2bn of sales, near 7% of the group. The sale closed on 18 June. The British arm is also about C$1.2bn of sales and about 7% of the group.

In June Saputo also agreed to leave its Australian fresh dairy venture with Danone. Last year it sold King Island Dairy. As late as February the group still called itself the leading maker of branded cheese and dairy spreads in Britain. Six months later it sold that lead.

Seven years, and no gain a shareholder can see

Saputo bought Dairy Crest in April 2019. It paid £6.20 a share, or about £975m for the shares. It now sells the same business at a price of about £988m. That second figure counts debt as well as shares.

The two numbers sit on different bases, so they are not a clean pair. That matters, because the second one is the flattering one. The honest reading is that seven years in Britain produced no gain a shareholder can see. That is before the money poured into Davidstow and Nuneaton, and before the cost of shutting Kirkby.

Why Britain got hard

British cheddar is a rough place to hold a brand. Own label comes from the same milk and the same kind of plant. It then sits on the same shelf for less. Shoppers moved that way through the price shock of recent years, and many stayed.

Saputo answered with cost work. It shut Kirkby, moved packing to Nuneaton and reworked its ingredients arm. The margin responded. Sales did not. The British arm still shrank 11% in the last quarter. A better margin on a smaller base buys time. It rarely buys a future.

Lactalis is buying what the sellers drop

This is Lactalis's fourth dairy deal in two months. It bought Protein Works in June, a British firm with about EUR 65m of sales. In July it moved for Triballat in France, which turned over EUR 365m. Also in July it agreed to take fine cheese assets from Agropur in Canada.

Last year it won Fonterra's consumer arm for NZ$3.8bn. Saputo was one of the parties that wanted those brands. Saputo's British arm turned over about £800m in its last full year, on Lactalis's own figure. So the price sits a little above one times sales.

Regulators now have a real question

Lactalis already sells cheese in Britain under Seriously and Président. Cathedral City is the best known cheddar brand in the country. Putting them in one house is the kind of match a competition body looks at closely.

The deal moves a very large milk buyer as well. Davidstow is the biggest cheese plant in Britain. The farmers who fill it will be selling to a French group with far more weight behind it. Closing is set for early 2027, which leaves plenty of room for a review.

What to take from it

Saputo fixed the British business and then decided it did not want to own the fixed version. Those are two separate calls. Most boards run them as one. So they sell after the bad news, when the price is worst.

For buyers, Lactalis has shown its hand. It will pay a little over one times sales for tired brands with strong plants behind them. Anyone selling a food business in Europe in the next year now knows the number in the room. Anyone competing with Lactalis should assume the shopping is not finished.