2nd UPDATE: US Cargill To Buy Permira's Provimi For EUR1.5 Billion
August 15 2011 - 4:33PM
Dow Jones News
Cargill Inc. will acquire Dutch animal-nutrition business
Provimi Group for EUR1.5 billion ($2.14 billion) in one of its
largest-ever acquisitions, expanding its reach deeper into the
global market for animal feed.
The world's largest agribusiness company is utilizing a balance
sheet bolstered this year by record profits and the sale of its
stake in fertilizer maker Mosaic Co. (MOS). The deal gets Cargill
off to a fast start for the fiscal year after reporting last week
it spent $3 billion on acquisitions and to expand existing
businesses in the fiscal year ended May 31.
Cargill's acquisition strategy is closely watched since the
privately held company is known for making deals when an economic
downturn scares away others. It is in a strong position for
acquisitions after paying down debt following the sale of its
majority stake in Mosaic in May. Yet opportunities may be limited
because of the ongoing boom in world agriculture even as other
sectors falter in the face of broader economic concerns.
The Provimi deal announced Monday will give Cargill entry into
new feed markets in Europe and South America and deepen its reach
across the supply chain for animal feed, adding more specialty
products. Provimi will add France, United Kingdom and Brazil, among
other countries, to the reach of Cargill's animal-nutrient unit and
expand product offerings for feed mixes and additives engineered to
increase production.
"This acquisition would mark a significant step in Cargill's
animal nutrition growth strategy," said Paul Conway, Cargill's vice
chairman.
Rotterdam-based Provimi operates in 26 countries with about
7,000 employees. No layoffs are planned as a consequence of the
takeover, and the brand name will be kept, Provimi executives
said.
Provimi posted earnings before interest, tax, depreciation and
amortization, or Ebitda, of EUR154.2 million on sales of EUR1.6
billion for the year ended Dec. 31, 2010. Ebitda for the first half
of 2011 was EUR86 million, up 20.3% from the same period last
year.
Provimi is being sold by private-equity firm Permira. Provimi is
part of a larger group of businesses Permira bought in 2007 for
around EUR580 million. Permira sold Provimi's Budapest-based
pet-food business to Advent International for EUR188 million
earlier this year. On completion of the sale, Permira will have
made 2.3 times the cash it put into its original acquisition of the
whole group in 2007.
SVG Capital PLC (SV.LN), a private equity company that invests
in Permira, said it expects to receive GBP116.9 million from the
sale.
The sale of Provimi was run by J.P. Morgan Chase (JPM) and
attracted several bidders. Credit Suisse Group (CS) advised Cargill
on the deal.
Rival Nutreco NV (NUO.AE) and Dutch life and materials sciences
company Royal DSM NV (DSM.AE) were considering a joint bid and
China's New Hope Group Co. was also reported to be interested.
Nutreco declined to comment on news of the takeover, saying only
that it will move forward with its strategy of both organic growth
and growth through acquisitions. Royal DSM declined to comment.
Provimi Chief Executive Ton van der Laan said in an interview he
is confident that the takeover can be completed by the end of this
year.
-By Marietta Cauchi and Mark Peters, Dow Jones Newswires; +44
207 842 9241; marietta.cauchi@dowjones.com
(Bart Koster and Scott Kilman contributed to this article.)