Global food, ingredients and retail giant Associated British Foods (ABF) has announced the acquisition, by its subsidiary ACH Food Companies, of Unilever’s branded corn oil and corn products business in the US, Canada and Puerto Rico, for an all cash consideration of £248m (US$360m).
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The consideration will be paid from existing resources at completion following the grant of appropriate regulatory approvals. There will be a closing adjustment to take account of changes in inventory levels. The acquisition positions ACH, already a leader in North American food oils in the foodservice and own label markets, as a leader also in the branded retail sector.
As a result of this transaction ACH will acquire a manufacturing facility in Argo, Illinois, manufacturing assets in Puerto Rico and New Jersey, goodwill, and leading brands from Unilever which include: Mazola (salad and cooking oils), Argo (cornflour), Kingsford’s (cornflour), Purlite (cooking oil), Karo (corn syrup), Golden Griddle (table syrup), Henri’s (salad dressing) and a number of Canadian brands. The acquired brands achieved sales in 2001 of US$310m. The acquisition includes net tangible assets valued at 31 December 2001 at US$46m.
ACH is already a leader in the branded foodservice oil sector following its acquisition of the Whirl and Frymax brands from Procter & Gamble (P&G) last year. It is also a leader in own label vegetable oils in the US. This acquisition, which will be fully integrated into ACH’s operations, further strengthens its retail position by adding the leading corn oil brand to its portfolio. It will generate a return on investment in excess of the cost of capital from the outset and is expected to produce additional savings when fully integrated.
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By GlobalData*Highly complementary to ACH’s existing business which has:
*extensive knowledge and experience of the industry,
*strong trade relationships,
*an understanding of how to achieve operational efficiencies to deliver a low cost base.
*Mazola is a premium brand with a strong loyalty in the trade and with the consumer.
ACH can add value by:
*creating stronger channels to market
*achieving significant cost savings
*providing greater sales and marketing focus
Peter Jackson, CEO of ABF, said: “This acquisition is in line with our ongoing policy of investing in areas where we have strength and expertise. The successful integration of the former P&G branded foodservice oils business demonstrates our track record in absorbing and adding value to such acquisitions. We are confident that we will develop Mazola and associated brands for the benefit of our shareholders.”
