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Saputo Inc. is buying the third-largest dairy processor in Argentina for $50.8-million (U.S.) as the Montreal-based cheese maker moves to expand its international business into new export markets.

Saputo said yesterday that it has struck a deal with Molinos Rio de la Plata SA to acquire Molfino Hermanos.

The company has two plants, 850 workers and annual sales of $90-million, of which 40 per cent are exports.

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The deal is one of the first investments by a Canadian company in the South American country since financial and social turmoil two years ago battered Argentina's currency and wiped out many foreign investments.

Bank of Nova Scotia, for example, took a $540-million (Canadian) after-tax charge to write off its investment in Banco Quilmes. Calgary-based fertilizer company Agrium Inc. also took charges because of Argentina's woes.

Saputo said the acquisition will help it establish itself in a market where milk can be bought at competitive world prices, and "is in line with Saputo's goal of becoming a world-class cheese company."

Saputo shares closed up 10 cents to $26.48 yesterday on the Toronto Stock Exchange.

The deal for the Argentine company is subject to a final purchase agreement and some price adjustments before Nov. 30.

If it closes as planned, Saputo would have annual revenue of more than $3.5-billion, 47 plants and 7,850 employees in Canada, the United States and Argentina.

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