Almost a year after French dairy group Sodiaal began its pursuit to buy local peer Entremont Alliance, we could at last be set to see the creation of one of Europe’s largest dairy companies.
The race to buy ailing cheese maker Entremont has seen government intervention, opposition to interest from French giant Lactalis and tense discussions over the company’s debts, which, at times, put the prospect of any deal in jeopardy.
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Last week, Sodiaal announced that it and Entremont had signed a draft deal on a takeover. Details of the agreement are sketchy, although reports claim that a deal on the stumbling block of Entremont’s debts had been reached. This has yet to be confirmed but, nonetheless, news of a draft deal suggests the two sides are closer than ever and the creation of Europe’s fourth-largest dairy group is near.
A deal would be the biggest in the dairy sector since the merger between Dutch groups Friesland Foods in Campina in late 2008. The financial crisis put paid to any further M&A in the sector but consolidation in dairy is seen as inevitable.
With the EU scrapping quotas in five years time, Europe’s dairy processors will be able to produce more to export to the world’s emerging markets – and some companies see increased scale as vital in serving those markets.
Employee groups at Sodiaal and Entremont will meet later this month to vote on the deal. For Sodiaal, the takeover may give the business scale but, given the parlous state of Entremont’s finances, what will the future mean, for instance, for yoghurt business Yoplait, in which Sodiaal holds a 50% stake?
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By GlobalDataRumours have long abounded about the intentions of Sodiaal’s partner in the Yoplait venture, private-equity firm PAI Partners. Every now and then reports pop up that say PAI is looking to sell its stake; could the deal with Entremont mean both Yoplait shareholders will now be looking for buyers?
Meanwhile, elsewhere in the food industry, the Brits have also been looking to France for increased scale. R&R Ice Cream has confirmed plans – first reported on just-food in April – to buy French ice cream maker Rolland.
The deal, announced last week, would create the second-largest ice cream firm by supermarket sales in France, the UK and Germany. Rolland has private-label contracts with E. Leclerc and Carrefour in France, Metro Group in Germany and Tesco in the UK.
Intriguingly, R&R chief executive James Lambert said the UK firm, owned by US private-equity firm Oaktree Capital Management, sees the Rolland acquisition as the first in a series of deals.
“The ice cream manufacturing sector continues to consolidate. This period of consolidation within the industry will also result in further growth opportunities and I fully expect to be announcing more acquisitions soon,” Lambert said.
While Oaktree continues to back a growing business in ice cream, its private-equity counterparts at Darwin Private Equity have taken the plunge and bought into the buoyant organic baby-food category.
Darwin has bought UK firm Plum Baby for GBP10m to tap into a category that continues to thrive despite the challenges seen elsewhere in the country’s organic sector.
The private-equity firm told us that it would look to boost Plum Baby’s listings in the UK although it also hinted it had carried out some work to see if the business could take root in Europe.
Darwin, which also owns sports nutrition business Maximuscle, is eyeing further acquisitions in the food sector, particularly in the “niche areas” of food, partner Jonathan Kaye told us.
Plum Baby could be just the latest addition to the family
