Shares in Dutch organic group Wessanen fell in morning trade today (23 December), after the company announced that it had sold Tree of Life for a price that fell short of market expectations.
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Wessanen has reached an agreement to sell its US organic unit Tree of Life to Kehe Food for a total sum of EUR119-133m (US$169-189.6m), depending on fourth quarter trading.
According to Marco Gulpers, senior equity analyst at ING Wholesale Banking, the purchase price was “in line” with ING’s expectations of EUR70-140m.
However, he added, the market was disappointed that the sale failed to live up to its generally higher expectations.
“We believe the market was expecting much more,” he told just-food following the company’s announcement.
Wessanen has indicated that the deal would allow it to reduce debt and invest more heavily in expanding its business in Europe. However, Gulpers said that the sale price achieved cast some doubt over the group’s ability to increase its investment in Europe.
“Based on net debt FY09F of c.EUR75m and EBITDA FY10 of c.EUR34m net debt/ebitda is still above 2x which limits the quest for growth in European natural & organic space,” he commented.
Wessanen shares had fallen 10.97% at 13.31 CET, dropping to EUR4.27.
