The asset sold, CSM Ingredients, makes and distributes bakery ingredient such as fillings, glazes, toppings to pastry and bakery shops, as well as industrial customers.
Financial terms were not disclosed. US-based CSM Bakery Solutions, formed in 2013 when private-equity group Rhône Capital bought a clutch of bakery businesses from Dutch group CSM, said the sale would allow the company to “maintain its strategic focus on strengthening its position as a successful bakery products company”.
After the deal closes, which is expected to take place in the first quarter of next year, CSM Bakery Solutions will have its North America business, operated as Brill, Inc., and its European bakery-products arm, which is set to be rebranded.
Marianne Kirkegaard, CSM Bakery Solutions’ president and CEO, said: “This sale is a very important strategic move for us and allows us to focus on our core bakery-products offering, in both Europe and North America. With the support of Rhône, we have managed to strengthen our position in all geographies for both bakery ingredients and bakery products and the sale of CSM’s European and international bakery ingredients business is a very natural next step for us.”
In August, credit agency Moody’s upgraded its ratings of CSM Bakery Solutions and revised its outlook on the business to “stable” from “negative”.
Moody’s said the upgrades reflected the completion of a recapitalisation, including debt maturity extensions up to 18 months, along with a EUR50m cash equity contribution the business received.
At the time, Moody’s said: “The transaction reduced financial leverage and enhanced liquidity through repayment of revolver borrowings, adding cash to the balance sheet and extending maturities. This has provided the company a modest window to reduce financial leverage through an operational turnaround or other possible actions such as asset sales.”
Neverthless, the agency added: “Moody’s cautions that financial leverage will remain high and liquidity could deteriorate over time as the extended maturities draw closer. Additionally, the company’s ability to generate positive free cash flow will be challenged over the next year by significantly higher financing costs associated with the refinancing and business disruptions and slowdowns caused by the coronavirus pandemic.”
Luxembourg-based Investindustrial, which owns Spain-based chocolate and cocoa ingredients supplier Natra, said CSM Ingredients generates annual revenues of around EUR500m with eight manufacturing facilities. The investor said the division’s “main markets” in Europe include Germany, Italy and France, adding the business has “a growing presence in China and Asia”.
Andrea Bonomi, chairman of the Investindustrial industrial advisory board, said: “CSM Ingredients is a leading player across Europe, with a growing international presence, over 400 salespeople and strong coverage of the region. This is a unique opportunity to become a long-term owner of a sizeable pan-European platform in the stable but still fragmented food ingredients sector. It is an ideal platform from which to pursue M&A-led growth and organically diversify further into higher value-add ingredients and higher-growth regions, including Italy and China.”