Equity firm to combine Heinz, Premier Foods acquisitions

By Ahmed ElAmin

- Last updated on GMT

Related tags: Premier foods, European union, Brand, Food, Heinz

Another shuffle is about to occur in the EU's food processing
marketplace as a Netherlands-based equity firm announces plans to
buy local operations belonging to Heinz and Premier Foods,
thencombine them into one firm selling vegetables products.

Stagnant consumer spending in western Europe, increasing retailers consolidation and buying power, along with price competition and higher input costs have depressed food sales. Discountsupermarkets such as Aldi have also eaten into market shares by carrying own-label products at relatively cheap prices.

In response, food processors such as Heinz and Premier Foods have been reorganising, pulling back from some markets and focusing on their core brands. Both companies European financial results beenpulled down by poor sales.

In a statement NPM Capital said it will buy the canned vegetable business currently owned by UK-based Premier Foods and combine that with Heinz's Hak brand. The combined businesses will haveestimated sales of about €150m.

Earlier this year, Heinz said it would seek buyers for the Hak business as part of the company's plan to reorganise its European operations. Heinz strategy will focus on three market categories:ketchup, condiments and sauces, meals and snacks, and infant nutrition.

Heinz will refocus its European operations to replicate the company's model used to boost growth in North America and Australasia. The Hak brand is the market leader in the Netherlands forpreserved vegetables sold in glass jars. Hak had annual sales of about $65 million last year.

Heinz said it is also continuing to explore sale options for its European seafood along with its frozen and chilled foods businesses as announced on September. The sale is expected to take up to 12months.

Following the potential divestitures, Heinz Europe would generate annual revenue of $2.5bn, representing about 30 per cent of Heinz's global sales. Currently Europe makes up about 40 per cent ofsales.

Premier Foods will sell its Jonker Fris and Premier Foods BV units to NPM Capital. Jonker Fris manufactures and sells canned vegetables and fruit principally for private label customers in theNetherlands and Germany.

Jonker Fris is Premier's only business based outside the UK. Last week the company sold its tea business to the India-based Apeejay Surrendra Group for £80m ($142m).

NPM said it intends to create a company from the two purchases, to be called "Dutch Glory". The company will focus on well-known Dutch food brands.

Related topics: Processing & Packaging

Related news