Bakery division of Vivartia sold at a premium, claims MIG

By Jane Byrne

- Last updated on GMT

Related tags Investment

The bakery and confectionary division of Vivartia, Greece's largest food production company, is being bought by a group led by Saudi Arabia's Olayan in a move that is claimed will reduce the firm’s exposure to risk in a turbulent Greek economic climate.

Vivartia parent company, Marvin Investment Group (MIG), said that it will sell the unit, formerly known as Chipita, to a group led by Olayan and Spyros Theodoropoulos, Chipita's former chief executive, for €730m including debt.

MIG, which bought Vivartia in 2007, added that a total €327m of the acquisition price is debt to be assumed by the buyers and the deal is set to complete by July this year.

The divestment of the bakery unit will also enable Vivartia to retain substantial liquidity to be used for further growth of its remaining operations as MIG said it estimates that the transaction will generate yearly interest expense savings of at least €25m.

The division produces croissants, strudels and brioche products as well as sweet and savour snacks.
Sources close to the transaction said that the bakery and confectionery division told that the decision to divest of the unit was not based on performance as it is a strong asset.

“We received an attractive offer for the division, a price that is 12.6 times the 2009 EV/EBITDA, and a deal which would result in a positive impact on the balance sheet of both MIG and Vivartia,”​ said the industry insider.

MIG said that it has the right to repurchase up to 30 per cent of the unit over the next four years at a pre-determined price.

Vivartia, which also has dairy and juice, frozen food and food service operations, has operations in several countries, including Greece, Mexico, Bulgaria, Cyprus, Egypt and Russia.

The company entered the US bakery market in March 2008 with the acquisition of biscuit and cookie firm Nonni.

And, as part of the divestment of the business to the Olayan led group, MIG said it will also retain for a period of 5 years, a 30 per cent profit sharing upside resulting from any potential disposal of this US subsidiary.

The US acquisition followed a decision by the company to break into the Saudi Arabia bakery market. In June 2007, the bakery and confectionery unit established a joint venture with Western Bakeries and Olayan Financing Company (OFC), which the company said, at the time, was in line with its plans to expand the division beyond Europe.

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