DAIRY CREST GROUP PLC
PROPOSED ACQUISITION OF ST HUBERT FOR €370 MILLION (£248 MILLION)

Dairy Crest Group plc (’Dairy Crest’) today announces that it has entered into an agreement intended to lead to the purchase of Saint Hubert SAS (’St Hubert’), the French and Italian spreads business of Uniq plc (’Uniq’), for €370 million (approximately £248 million). St Hubert is a leading participant in the French spreads market with a market share of approximately 31%. It has a strong market position in the growing Healthy spreads category, with its core brands ’St Hubert Omega 3’ and ’St Hubert Cholegram’. Its other brands include ’St Hubert 41’ and ’Le Fleurier’. It is also the market leader in the small Italian spreads market with its ’Valle’ brand.

In the first full year the Directors expect that the Acquisition will be earnings accretive and will generate a return on invested capital in line with Dairy Crest’s weighted average cost of capital.

Strategic Rationale for the Acquisition

The fundamental aim of Dairy Crest’s strategy is to grow its business by investing in sectors where it has the ability to add value through building strong brands. The Directors believe that St Hubert has strong brands and good market positions in both France and Italy and believe that the Acquisition offers many benefits and opportunities including:

• Increasing the proportion of Dairy Crest profits deriving from brands. Together with the recent disposal of the majority of Dairy Crest’s retailer brand cheese operations, the Acquisition will significantly improve the Group’s overall quality of earnings;

• Operational and commercial opportunities from linking St Hubert with Dairy Crest’s existing UK spreads business; and
• The move into Continental Europe should provide opportunities for future growth.

St Hubert The French spreads market is principally a branded market with three manufacturers (including St Hubert) holding a market share of over 90%. In the year to August 2006 the market grew by 1% to €422 million (£283 million). Within this the Healthy spreads category, of which St Hubert has a 35% share, grew by 10%.

• St Hubert has:
- a wholly branded portfolio with high levels of retail distribution and established relationships with all the major French retailers;
- a 31% market share of the French spreads market; - an experienced and capable management team which is expected to remain with the business;
- efficient production facilities at its Ludres plant with low future capex requirements; and
- a track record of innovation in high growth value-added sectors.

• In the financial year ended 31 March 2006, St Hubert had sales of €93.5 million (£62.7 million), operating profit (EBIT) of €28.4 million (£19.0 million) and EBITDA of €34.0 million (£22.8 million). The Acquisition price therefore represents a multiple of 10.9 times 2005/06 EBITDA.
• St Hubert has strong cash generation with low capital requirements.

Financing arrangements for the Acquisition

The cash consideration will be funded from new bank facilities totalling £200 million, existing borrowing arrangements and the proceeds of the Placing, which will be separately announced today.

Conditions of the transaction and break fees

Dairy Crest has entered into a Memorandum of Understanding (’MOU’) which obligates Dairy Crest but not Uniq to enter into the Acquisition Agreement following completion of the Workers Consultation.

The Acquisition is conditional upon:

• Dairy Crest obtaining the approval of its shareholders; and
• Uniq obtaining the approval of its shareholders.

Assuming the conditions are satisfied, Completion is expected to occur in early 2007.

Break fees are payable by both Dairy Crest and Uniq in certain circumstances if the Acquisition does not complete. A summary of the principal terms of the Acquisition is set out in section 6 of this announcement.

Chief Executives’ comment:

Commenting on the Acquisition Drummond Hall, Chief Executive, and Mark Allen, Chief Executive Elect, of Dairy Crest, said: ’We believe that St Hubert is a strong business with a 100% branded portfolio in a sector that we know and understand well. The acquisition significantly increases the proportion of our profits coming from brands and as a result it improves the overall quality of our earnings. In addition the move into continental Europe should provide opportunities for future growth.’ 

Enquries:
Luke Withnell  020 7484 8800