German private equity group Deutsche Beteiligungs (DBAG) aims to create a “leader” in the European private label chilled ready meals and snacks market through the acquisition of two family-owned companies: Abbelen and Oscar Mayer.
Abbelen generates revenues of EUR140m (US$148.6m) and is the largest manufacturer of chilled meatballs and ready-made burgers in Germany; with products largely sold under private label brands to supermarket chains. Meanwhile, DBAG said, Oscar Mayer holds a “leadership position” in the UK for ready meals and snacks delivered to large grocery retailers and discounters. In its most recent financial year, Oscar Mayer generated sales of GBP253m ($316m). The group supplies ready meals to UK retailers including Sainsbury’s, Morrisons and Aldi.
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“Creating a European market leader with leading national providers of fresh convenience food products is, in our opinion, an attractive entrepreneurial approach,” said Dr Rolf Scheffels, member of the DBAG board of management. “The market for ready meals and snacks is rarely cyclical and is constantly growing at a high rate, and private labels are benefiting particularly strongly. We are investing in a very attractive segment of the food market.”
The two companies will continue to be run autonomously, but will now operate under the umbrella of a joint management holding company. DBAG Fund VII will hold about 90% of the interests in the management holding company. Managers Helmut Morent and Francois Legrain alongside senior executives of the group companies will hold the remaining 10%.
“The objective is to further build the companies’ product range and internationalise the group’s distribution activities more strongly, to which add-on acquisitions will also contribute,” DBAG revealed.
The PE firm said bolt-on acquisitions will “complement” the existing product portfolio and offer ranges that are “marketable in multiple markets”. DBAG said that it aims to grow the businesses revenue to more than EUR500m.
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By GlobalDataInternationalisation and innovation will also contribute to the growth of the enlarged company, DBAG said.
The parties agreed not to disclose the purchase price. However, DBAG did reveal that, to finance the transaction, the top-up fund of DBAG Fund VII will be used, which enables equity capital investments of up to EUR200m for a single transaction. Initially, about EUR80m in equity will be invested for the management holding’s first two acquisitions, the PE group said.
