Barry Callebaut Buying Petra Foods' Cocoa
The deal will make Barry Callebaut the world’s biggest cocoa processor, as it gains seven factories in countries including Indonesia, Malaysia and Thailand, with combined annual grinding capacity of 405,000 metric tons, the Zurich-based company said today in a statement. The purchase is expected to be completed in mid-2013.
Buying the unit, which already supplies Barry Callebaut, will boost sales in Asia and Latin America by 65%, according to the company, as demand for chocolate grows. The acquisition would be the Swiss company’s biggest, according to data compiled by Bloomberg, and follows plans announced this year to build a $16 million chocolate factory in Turkey and expand chocolate molding capacity in North America.
“Barry Callebaut is securing a No. 1 position in the fast- growing emerging markets, however at a high price,” Jean- Philippe Bertschy, an analyst at Bank Vontobel, wrote in a research note. The “key challenge will be to restore Petra’s profitability.”
The enterprise value of the deal is 14.4 times the business’s earnings before interest, taxation, depreciation and amortization, according to Vontobel’s Bertschy.
The purchase will be funded initially through bank loans that will be replaced by a combination of equity and debt sales within 12 months, Barry Callebaut said. Executives at the company said on a conference call that Barry Callebaut will become the largest buyer of cocoa beans with the takeover.
“This significant transaction will allow us to continue our expansion strategy in all regions and capture additional opportunities through outsourcing and partnership agreements,” Chairman Andreas Jacobs said in the statement.
Credit Suisse Group AG is advising Barry Callebaut on the transaction and Lazard Asia Ltd. is financial adviser to Petra Foods, the companies said in separate statements.
Petra Foods “will focus on strengthening and expanding its branded consumer business in the fast-growing regional economies” after it sells the division, which supplies Nestle SA and Mars Inc., the Singapore company said.
The proceeds will be used to reduce debt, with the balance of about $300 million available for investment it its consumer business and possible distribution to shareholders, it said.
The business generated 75% of Petra Foods sales and 51% of earnings before interest, tax, depreciation and amortization last year, according to data compiled by Bloomberg. The company will enter into an agreement with Barry Callebaut to buy cocoa ingredients after the sale, it said.