Permira's Provimi Draws Strategic Bidders In 1st Round -Source
June 23 2011 - 11:44AM
Dow Jones News
Provimi, the Dutch animal food maker owned by Permira, has
attracted several international bidders in the first round of an
auction, a person familiar with the situation told Dow Jones
Newswires Thursday.
Dutch rival Nutreco NV (NUO.AE) and Dutch life and materials
sciences company Royal DSM NV (DSM.AE) submitted bids earlier this
week, the person said. Chinese agriculture firm New Hope Group Co.
and U.S.-based Cargill Inc. also put in bids, according to press
reports.
The sale is being run by JPMorgan Chase (JPM) and second round
bids are due at the end of July.
Based in Rotterdam, Provimi posted profit before tax of EUR65.1
million on sales of EUR1.6 billion for the year ended Dec. 31,
2010.
The company has been valued at up to EUR1.8 billion which could
deter the Dutch bidders. Analysts say that Nutreco can only pay a
maximum price of EUR1.3 billion, while market observers see the
strategic rationale of DSM buying Provimi but question the
price.
Like Provimi, DSM produces ingredients and additives for animal
feed, but acquiring Provimi would enhance its exposure to emerging
markets, such as India, Brazil and Russia, where Provimi has a
strong position.
After the acquisition of U.S. nutrition company Martek
Biosciences for $1.09 billion in cash in December last year, DSM
said its cash position of over EUR2 billion allows it to do other
large acquisitions with a similar size as Martek.
DSM's enterprise value/earnings before interest, tax,
depreciation and amortization, or Ebitda, ratio stood at 6 at the
end of 2010, compared with 11.7 for Provimi if sold for EUR1.8
billion, making the price excessive, a KBC Securities analyst
said.
In addition, the acquisition would have a dilutive effect on
DSM's margins given Provimi's Ebitda margin of 9.5% in 2010,
compared with 23.4% for DSM's nutrition division.
-By Marietta Cauchi and Anna Marij van der Meulen, Dow Jones
Newswires; +44 207 842 9241; marietta.cauchi@dowjones.com