Barry Callebaut AG, the largest maker of bulk chocolate, agreed to buy Singapore’s Petra Foods Ltd.’s cocoa ingredients unit for US$950 million ($1.16 billion) to expand its processing capabilities and boost sales in Asia.
The deal will make Zurich-based Barry Callebaut the world’s largest cocoa processor, as it gains seven factories in countries including Indonesia, Malaysia and Thailand, with combined annual grinding capacity of 405,000 metric tons, the company said today in a statement.
Buying the unit, which already supplies Barry Callebaut, will boost sales in Asia and Latin America by 65%, according to the statement, amid growing demand for chocolate. The acquisition would be Barry Callebaut’s biggest, according to data compiled by Bloomberg, and follows plans announced this year to build a US$16 million chocolate factory in Turkey and expand its chocolate molding capacity in North America.
“This significant transaction will allow us to continue our expansion strategy in all regions and capture additional opportunities through outsourcing and partnership agreements,” Chairman Andreas Jacobs said today in the statement.
The deal will be funded initially through bank loans that will be replaced by a combination of equity and debt within 12 months, according to the statement.
Credit Suisse Group AG is advising Barry Callebaut on the transaction and Lazard Asia is financial adviser to Petra Foods, the companies said in separate statements.
PETRA FOODS
Petra Foods “will focus on strengthening and expanding its branded consumer business in the fast-growing regional economies” after it sells the unit, which supplies Nestle SA and Mars Inc., the company said today. Petra, which closed at $2.75 a share yesterday before being halted, has climbed 49% this year.
The proceeds will be used to reduce debt, with the balance of about US$300 million available for investment it its consumer business and possible distribution to shareholders, it said.
The business generated 75% of Petra Foods sales and 51% of its earnings before interest, tax, depreciation and amortization last year, according to data compiled by Bloomberg. The company will enter into an agreement with Barry Callebaut to buy cocoa ingredients after the sale, it said. The unit had a book value of US$784 million as of Sept. 30, according to Barry Callebaut.
COCOA MARKET
Cocoa demand will exceed production by 101,000 metric tons this season, Macquarie Group estimated in September. Rabobank International predicts a 122,000-ton shortfall. Global output will drop 2.9% to 3.85 million tons, led by smaller harvests in Ivory Coast, Ghana, Indonesia and Nigeria, Macquarie said. The four nations produce 74% of the world’s beans.
Cocoa processing will rise by 3.4% in 2012-13 as demand outstrips supply by 83,000 metric tons, according to Rabobank. Prices will average 1,650 pounds ($3,249) a ton in London in the first quarter next year and 1,625 pounds a ton in the following three months, the bank estimates.
Cocoa has climbed 13% on ICE Futures U.S. in New York this year, partly on speculation dry weather in West Africa, which accounts for about 70% of the world’s supplies, would damage crops in 2012-13.
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