FDBusiness.com

Raisio Group, the Finland-based international specialist in plant-based nutrition, has acquired the Benecol business in the UK, Ireland and Belgium from global health care giant Johnson & Johnson and amended its agreement concerning the North American rights to Benecol in a deal worth Eur88.4 million. In the UK and Ireland, Benecol is the market leader in cholesterol-lowering functional foods. The acquisition is estimated to increase Raisio’s EBIT by some Eur9 million annually.

For the first time since 1997, Raisio will have all the rights to the Benecol brand and plant stanol ester, the Benecol product ingredient. This will allow Raisio to develop the business globally on a new basis.

“Benecol is a globally well-known cholesterol-lowering functional food brand owned by Raisio. The acquisition of the Benecol business in the UK, Ireland and Belgium as well as the amended agreement in the USA strongly support Raisio’s growth strategy with its branded business. In terms of Benecol products, Raisio’s long-term strategic goal is to enhance competitiveness in the existing markets, to expand into new markets as well as to innovate new products. Through this arrangement, we will have the opportunity to develop Benecol business on our own terms, following our strategic objectives,” says Raisio plc’s CEO Matti Rihko.

Johnson & Johnson has had the exclusive right to sell and market Benecol products in the UK, Ireland and Belgium. With the acquisition, rights to the Benecol trademark and plant stanol ester patents held by Johnson & Johnson will return to Raisio. The US business is included in the deal, but Johnson & Johnson will continue as Raisio’s licensee for the time being. The amended agreement allows for the return of the Benecol rights and transfer of certain US assets to Raisio or its possible new licensee at a later date.

The completion of the Eur88.4 million deal does not require an approval from the competition authorities. Raisio financed the acquisition by a long-term loan of Eur80 million.

This arrangement meets the criteria that Raisio has set on its acquisitions and is in line with the company’s vision focusing on healthy and ecological snacks. Furthermore, EBITDA/EV factor is also in accordance with Raisio’s acquisition policy.

With the acquisition of the Benecol business in Europe, a few employees will join Raisio in the UK. In 2013, net sales of Benecol in the acquired European countries and USA were approximately Eur76 million, of which the UK and Ireland accounted for some 85%. In the UK and Ireland, Benecol products are market leaders in cholesterol-lowering functional foods.

Plant stanol ester of Benecol products has been chosen one of the world’s most significant nutritional innovations. Benecol products are sold in almost 30 countries on five continents. Benecol® is Raisio’s trademark and plant stanol ester the company’s widely patented ingredient of Benecol products. Benecol products account for about a fifth of the total consumer market for cholesterol-lowering functional foods worth approximately Eur1 billion.

Meanwhile, Raisio has decided to write down the book value of its Honey Monster cereals brand by Eur10 million as part of the restructuring of activities related to the Benecol acquisition.

The UK’s breakfast cereal category is not growing and its profitability has declined. Sales and profitability of Honey Monster cereals are therefore also expected to remain permanently below the normal levels of recent years. The write-down has no cash effect.