Swiss food giant Nestlé has announced that it is to acquire the Australian cereals, snacks and soups group Uncle Tobys, along with the rights to the brand in New Zealand, for AUS$890m (US$671m).
Nestlé is undertaking the purchase of Uncle Tobys through its Australian operation Nestlé Australia, but as part of the deal the Nestlé/General Mills joint venture Cereal Partners Worldwide (CPW) is to acquire the Uncle Tobys cereals business for US$375m in cash.
The acquisition of Uncle Tobys, which had sales of around AUS$400m in 2005, will give Nestlé Australia the number one position in the Australian nutritious snacks market, and make it Australia’s second largest producer of instant soups. The Uncle Tobys snacks are marketed under the Uncle Tobys brand, while the soups are sold under the Country Cup brand.
Nestlé said both categories were strategically important to the company as it looks to increase emphasis on nutrition, health and wellness.
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“The combination of the Uncle Tobys and Nestlé businesses provides a strong opportunity for synergies, both in terms of cost, but also through growing the Uncle Tobys brands in channels where Nestlé has particular strength, including impulse,” Nestlé said.
Uncle Tobys recorded EBITDA of AUS$79m in 2005, giving the price tag an EBITDA multiple of 11.3.
Nestlé added that the acquisition of such a well respected established company underlined its commitment to Australia, where it has been present for almost 100-years. The group’s sales in the country totalled in excess of AUS$2bn last year.
CPW’s acquisition of the Uncle Tobys cereals business is expected to close in the summer. It will also include the rights to market the Uncle Tobys ready-to-eat and hot cereals in New Zealand. Manufacturing of the cereals will remain at the Uncle Tobys facility in Wahgunyah, Victoria.
The second largest cereals producer in the world, CPW entered the Australian market in 2003 with the Milo, Cheerios and Nesquik brands. This deal will make it the second largest cereals company in Australia which has one of the largest ready-to-eat cereal markets in the world with annual retail sales in the region of US$600m.
