FDBusiness.com

Refresco Group, the leading European bottler of soft drinks and fruit juices for A-brands and retailers, has agreed to acquire US-based bottler Whitlock Packaging for $129 million (Eur117 million) on a debt and cash free basis. This represents an EV/adjusted EBITDA multiple of 7.3x and is in line with the average multiple paid by Refresco on previous transactions. The acquisition is expected to be earnings accretive in the first full year of consolidation.

Refresco has established its leading position in Europe over the past 16 years through the successful execution of its ‘buy & build strategy’. The acquisition of Whitlock Packaging represents a new chapter in Refresco’s growth strategy as it enters the North American market for the first time. The acquisition of a large scale US bottler is Refresco’s first step towards expansion beyond Europe and creates a strong second platform for further growth in North America.

Whitlock Packaging has long-standing relationships with leading A-brands in the US soft drinks market and more than 80% of Whitlock Packaging volumes relate to customers currently being served by Refresco in Europe. Refresco will now be able to provide A-brands and retail customers with reliable supply chain solutions in Europe and North America. The deal grows Refresco’s co-packing activites to 34% of total group volume.

Refresco has developed a successful private label business in Europe and intends to leverage its experience to further develop Whitlock Packaging’s private label capabilities. It will contribute to Whitlock Packaging’s expansion with a focus on innovation, procurement, operational excellence and industry best practices.

Refresco intends to continue executing its buy & build strategy both in Europe and North America by making selective investments and acquisitions, and targeting value-creating opportunities. The acquisition of Whitlock Packaging is the first step towards establishing a similar market position in North America as Refresco has achieved in Europe, with comparable returns.

Hans Roelofs, chief executive of Refresco Gerber.

Hans Roelofs, chief executive of Refresco, comments: “For some time we have been carefully exploring opportunities to enter the North American market and create a second platform for growth. Whitlock Packaging provides a perfect strategic fit, as it is a market-leading player focused primarily on co-packing – an area of our business that we actively want to grow. Whitlock Packaging adds a new and exciting platform for growth for Refresco in North America. About 80% of the customers of Whitlock Packaging are already customers of Refresco in Europe. As such, Whitlock Packaging offers the opportunity to grow in a new market alongside existing customers, while offering them similar and reliable supply chain solutions as we do in Europe.”

In 2015, Whitlock Packaging’s volume amounted to approximately 900 million liters, split between co-packing (98%) and private label (2%). The company’s annual revenue, mainly related to filling fees, amounted to approximately $127.3 million. Whitlock Packaging can produce all major packaging formats and was one of the first US bottlers to produce aseptic beverage cartons. Today its hot-fill and aseptic production capacities are among the largest in the North American market.

After completion of the transaction Whitlock Packaging will be rebranded to Refresco US, reporting directly into the executive board of Refresco Group. The transaction will be subject to US regulatory approval and customary closing conditions. Closing is expected to occur in the second half of this year.