Glenboden M & A Originations

Unilever and Nestle talk health but acquire ice cream in BRIC countries

Priority Rating priority rating 3
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Origination Status buyer announcement of business acquisition, February 2008
Asset Inmarco (Russia), leading domestic ice cream business
Buyer Unilever (UK /Holland), multinational FMCG group
Seller Inmarko founders, Norum private equity, EBRD
Buyer Rationale expansion in a priority BRIC geography
Seller Rationale attractive valuation, exit timing
NBs in parallel, Nestle rumoured to be close to acquiring Russian ice cream maker Snezhniy Gorodok
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Unilever to some extent, and Nestle in a big way, are talking a lot these days about having a healthier or at least ‘better for you’ portfolio. It's ironic therefore that both of them are still investing quite heavily in that archetype of healthy living, ice cream. The fact is that a healthy offering is nice-to-have but high margins are must-have; and margins in the ice cream category are generally very high. On top of that you have high growth, a big market and a premiumisation trend in Russia. Anticipate further ice cream acquisitions by these groups in other BRIC countries.

How strong and scalable is Inmarko ? It was founded in the early 1990s in Novosibirsk in Siberia, which presumably gave it an instant cost advantage over its rivals in terms of refrigeration. With sales revenue of € 115 mln last year, it has enjoyed an annual growth rate of 15-20% over the last five years, and is the biggest ice cream business in central and eastern Russia. However, the company admits that its total market share is only about 10%; what’s more, the sales are spread across as many as 15 sub-brands, and a lot of the portfolio seems quite ephemeral.

Maybe that doesn’t really matter too much – Unilever will be rolling out Algida, across Inmarko’s distribution network, very quickly.

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THIS LEAD'S VALUATION
Size (€ mln) 130
Sector ice-cream
Asset Quality Russia leader branded
Seller private equity
Buyer large plc
P/S 1,1
P/Ebitda n/a
Type total consideration
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