Saputo tumbled as much as 7.8 per cent after Spruce Point Capital Management published a negative report, arguing that the Canadian dairy producer has overpaid for acquisitions that aren’t working out.
Spruce Point said it’s short the stock and sees 40 per cent to 60 per cent downside. Saputo said the investment firm has “never engaged with the company” and that its report is misleading and contains incorrect information.
The Montreal-based company has made a number international acquisitions in recent years. In 2019, it bought UK-based Dairy Crest Group for £975 million , not long after closing a deal for Australia’s biggest dairy processor. “After factoring in Canadian dollar currency depreciation, we estimate just 2.4 per cent of organic revenue growth in the last five years,” the investment firm wrote.
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