Cloetta has struck a deal to acquire dry roasted nut maker Alrifai Nutisal as part of its strategy to broaden its snacks line-up.
The Swedish confectioner has agreed to pay SEK110m (US$16.9m) in cash up front to Arval Holding, a company controlled by Lebanese nut firm Al Rifai Group. Cloetta has also agreed to pay a potential earn-out based on targets related to Nutisal’s performance in 2016. The earn out maximum is SEK300m in cash, the group revealed.
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The acquisition marks Cloetta’s first move into the snack nut category. According to research from Euromonitor International, nut sales are likely to grow by around 6% in Sweden this year. The researchers suggest nuts represent one of “the most dynamic categories” in the Swedish snack sector, which is growing by around 3% a year.
Cloetta CEO Bengt Baron said the group expected to generate “significant growth” of the Nutisal brand. The business will be able to capitalise on category growth and benefit from Cloetta’s “strong route to market”, Baron suggested.
Nutisal is expected to add around 1% to Cloetta’s top line in the “next few years”, the Swedish group said.
At present, Nutisal generates annual revenues of around SEK200m. Nutisal is Sweden’s second-largest nut brand and the market accounts for approximately half of sales. Nutisal is also sold in Denmark, Norway, Germany, UK and the Benelux countries.
Cloetta will register restructuring costs of SEK10m in 2014 and the group said synergy opportunities were “limited”. The deal will have a “very limited effect” on operating profit in 2014 and is expected to be EPS accretive by 2015, Cloetta said.
The deal is expected to close in January.
