Glenboden M & A Originations

Vivartia set to take off with string of acquisitions in bakery snacks

Priority Rating priority rating 3
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Origination Status company acquisition agreement signed, March 2008
Asset Nonni’s (USA), no.1 Italian -style biscuits and snacks producer in the US
Buyer Vivartia (Greece), largest food group in Greece
Seller Wind Point Partners (USA), private equity investor
Buyer Rationale expansion of US platform
Seller Rationale exit opportunity, acceptable valuation
NBs in parallel, Vivartia announced its tender to acquire the Everest fast food chain in Greece
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Vivartia is a food group to watch in the next few years. Created by the merger of four Greek food companies in 2006, its business plan for 2008 -12 envisages an ambitious tripling of its turnover, to € 3 bln. Its mission is to ‘showcase Greek entrepreneurship internationally’. Armed with a € 800 mln warchest, provided by its main shareholder Marfin Investment Group, this deal marks its fourth major acquisition in the space of a year. Anticipate more deals, especially in bakery snacks globally; also in frozen foods and dairy products in south-east Europe.

Huge in Greece already, with 30% market share in food in general and 90% household penetration, Vivartia has four divisions : dairy and drinks, foodservice and entertainment, bakery and confectionery, frozen food. Its main international focus is on south-east Europe, principally Bulgaria and Romania, where it already claims to have the biggest food distribution network. On top of that its bakery division, under the Chipita umbrella, has a more global mandate, with significant businesses in Poland, Russia, Mexico and now the US.

Nonni’s is Vivartia’s fourth acquisition in the last year. In 2007 it acquired United Milk, Bulgaria’s largest milk processor and no.2 yoghurt player; in the same year it bought Christie’s Dairy in Cyprus. Now it’s acquiring Nonni’s in US bakery and the Everest foodservice business in Greece. Potential next targets are in frozen food in south-east Europe, where it would compete with private equity; also further biscuit acquisitions in western Europe, for example the Kraft –LU divestment in Spain.

Nonni’s looks like an attractive proposition, given its clear ethnic –authentic profile in ‘biscotti’, which should mean a bright future for it in the US and possibly other developed markets. The valuation is also reasonable; quite possibly WPP took the opportunity to sell, after holding the company for exactly four years, without a major struggle over valuation.

The big challenge for Vivartia will be to meet its ambitious targets, in 2008 -12, whilst also coping with the complex organization structure that’s been cobbled together from its four predecessor companies.

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THIS LEAD'S VALUATION
Size (€ mln) 215
Sector biscuits
Asset Quality US no.1 niche
Seller private equity
Buyer mid-cap plc
P/S 1,7
P/Ebitda 10,0
Type total consideration
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