Bluegrass Dairy and Food

Date of Investment:

In July 2010, Dubilier & Company acquired Bluegrass Dairy and Food from the Company’s management and existing shareholders.

The Transaction:

Dubilier & Co. in conjunction with two food industry private investors (collectively “D & Co.”) contracted to purchase a vertically integrated food ingredients (mostly dairy based) company.

Founders/majority owners/management (one family) reinvested after tax proceeds, buying up to 25% of equity in the new company.

D & Co. bought out a minority shareholder (a food ingredient brokerage company which has been acting as the Company’s sales broker) resulting in lower sales commissions.

The new company was capitalized with $7 million of equity. In addition to management, the subordinated debt holder provided a significant investment in equity. Conservatively leveraged: total debt / equity of 3:1.

Business Description:

 Bluegrass is a supplier of high quality, value-added dairy and other specialty ingredients for the food and beverage industry. The Company’s focus is on dairy-based ingredient powders and higher margin value-added specialty ingredients, where essentially all items are custom manufactured to meet specific customer requirements for flavor, texture and application.  Reflecting their expertise in cheese making, Bluegrass won the 2010 World Championship for Monterey Jack.

Bluegrass owns and operates two plants in central Kentucky (Springfield and Glasgow) with full processing capabilities: pasteurization, cream separation and homogenization, evaporation, heat exchange and blending. Glasgow is the primary milk balancing plant in the region, which provides the advantage of committed supply of milk at the lowest cost. Milk received at Glasgow is processed into cheese and other items, most of which are further processed at the Springfield plant, providing Bluegrass with higher margins than competitors who must purchase cheese and butter raw materials for processing into powders and flavor products.

The combined plants total approximately 100,000 square feet and are capable of handling 680 million pounds of milk annually.

The plants operate 24 hours per day, seven days per week, with a non-union work force of 165 employees.

Investment Highlights:

 The Company is the primary milk balancing plant in the Southeast, assuring it of a constant and low cost supply of milk for processing into value-added products.

 

www.bluegrassdairy.com