Blog: Dean BestBarry Callebaut eyes sweeter future after sealing Petra Foods deal

Dean Best | 2 July 2013

Barry Callebaut CEO Juergen Steinemann was bullish after the B2B chocolate giant closed its acquisition of Petra Foods' cocoa ingredients arm, a deal praised on a strategic basis but questioned over its price and the recent performance of the assets taken on.

The Swiss group moved for the Petra ingredients business in December, paying US$950m for operations in some of the world's fastest-growing cocoa and chocolate markets.

Shares in Barry Callebaut fell on the day the deal was announced, not because the market disagreed with the rationale for the acquisition but questioned the price the company had agreed to pay. Barry Callebaut also said at the time the acquisition of a lower-margin business meant it would have to change a medium-term earnings target.

Since then, Petra reported a slump in annual profits in part because of excess capacity in the cocoa ingredients sector in Asia, prompting analysts to ask about the outlook for the industry in the region.

Barry Callebaut has insisted it was aware of the excess capacity in Asia and had factored that in when it swooped to buy the Petra business.

It has defended the price it paid by pointing to Petra's assets being an "excellent strategic fit" and said cost savings from the deal meant its EBIT per tonne target would be reinstated by the 2015/16 financial year.

Yesterday, Barry Callebaut emphasised the extra volume it would get from the deal in "fast-growing emerging markets" and pointed to the second "strong base" of cocoa sourcing it would attain in Asia, adding to its operations in Africa.

"The cocoa business we acquired from Petra Foods is right at the core of Barry Callebaut," Steinemann said. "Being now the largest global supplier of high-quality cocoa products, we will be able to capture opportunities in the fast-growing markets for specialty cocoa powders even better. With the successful closing of the transaction, we can start to implement what we have prepared in the last six months and focus on the integration process."


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