FDBusiness.com

Cocoa and chocolate products manufacturer Barry Callebaut is acquiring the Cocoa Ingredients Division of Petra Foods, Singapore for $950 million. Petra Foods’ Cocoa Ingredients Division is the largest cocoa products supplier in Asia with a global sales volume of 265,000 MT and 47,000 MT of co-manufacturing volumes for large accounts, sales revenue of  $1.3 billion (SFr1.1 billion) and 1,700 employees in fiscal year 2011 (ended December 31, 2011).

The business has a significant global footprint across four continents with 405,000 MT of bean-grinding capacity in seven processing facilities, and four sales offices. The integration of Petra Foods’ Cocoa Ingredients Division will make Barry Callebaut the largest global cocoa processor.

The transaction also includes a long-term agreement with Petra Foods’ branded consumer division to supply it with cocoa products covering 75% of its total needs. The transaction is subject to approval by Petra Foods’ shareholders as well as regulatory authorities. The closing of the transaction is expected in summer 2013.

Juergen Steinemann, Barry Callebaut’s chief executive, comments: “The acquisition marks a major step forward in the implementation of our four-pillar growth strategy. A stronger integrated position in sustainable cocoa sourcing and processing is important to keep growing our chocolate business over-proportionally, especially in emerging markets. The deal also allows us to become a strategic supplier of specialty cocoa powders and meet the growing integrated value chain requirements of our customers and partners. Moreover, Barry Callebaut will gain valuable know-how and become even more global thanks to all the new colleagues whom we will welcome with open arms upon closing the planned transaction.”

The acquisition is in line with Barry Callebaut’s strategy for future growth based on the four pillars 1) Expansion, 2) Innovation, 3) Cost Leadership and 4) Sustainable Cocoa.

The run-rate synergy potential from the deal is expected to amount to SFr30-35 million, to be fully achieved four years after closing. The synergies will result from an enhanced purchasing platform, optimised product flows and overhead costs. To achieve these synergies, the group estimates one-off costs at SFr10-15 million, to be incurred equally between the first two years post transaction. Additionally Barry Callebaut estimates one-off transaction costs of approximately SFr10 million.

The transaction is expected to be accretive to earnings per share on a reported basis in the second full year of consolidation (fiscal year 2014/15).