Barry Callebaut AG, the largest maker of bulk chocolate, agreed to buy Singapore-based Petra Foods Ltd.’s cocoa-ingredients unit for US$950 million ($1.16 billion) to expand processing capacity and boost sales in Asia.
The deal will make 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 Zurich-based company said today in a statement. The purchase is expected to be completed in mid-2013.
Buying the unit, which already supplies Barry Callebaut, will boost sales in Asia and Latin America by 65%, according to the company, amid growing demand for chocolate. The acquisition would be the Swiss company’s biggest, according to data compiled by Bloomberg, and follows plans announced this year to build a $16 million chocolate factory in Turkey and expand chocolate molding capacity in North America.
“Barry Callebaut is securing a No. 1 position in the fast- growing emerging markets, however at a high price,” Jean- Philippe Bertschy, an analyst at Bank Vontobel, wrote in a research note. The “key challenge will be to restore Petra’s profitability.”
PETRA JUMPS
Petra jumped as much as 24% to a record S$3.40 and was trading up 20% at 4:34 p.m. in Singapore. The shares have surged 78% this year, valuing the food manufacturer at S$2.02 billion ($1.65 billion). Barry Callebaut declined as much as 2.1% to 921 Swiss francs and was trading down 1.7% at 9:38 a.m. in Zurich. That pared the stock’s gain this year to 1.8%, valuing the company at 4.79 billion francs ($6.2 billion).
The purchase will be funded initially through bank loans that will be replaced by a combination of equity and debt sales within 12 months, Barry Callebaut said. Executives at the company said on a conference call today that Barry Callebaut will become the largest buyer of cocoa beans with the takeover.
“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 in 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.
NEW FOCUS
Petra Foods “will focus on strengthening and expanding its branded consumer business in the fast-growing regional economies” after it sells the division, which supplies Nestle SA and Mars Inc., the Singapore company said today.
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 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 the Swiss company.
Cocoa demand will exceed production by 101,000 metric tons this season, Macquarie Group Ltd. 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 PRICES
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 ($3,247) 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.
No comments:
Post a Comment