The owner of Poppets is selling the confectionery part of its business to an Irish food firm.
Raisio, from Finland, also own Fox’s Glacier Mints and XXX Mints, which were included in the deal.
Big Change of Hands
The deal will see a range of brands changing hands between the two companies – Finnish Raisio and Irish Valeo Foods. The deal was apparently worth €100M (£88.6M).
The confectionery side of the business included Poppets, Fox’s, and XXX Mints, as well as six factories which are used to produce the lines. They have already been transferred to Valeo and officially became part of their business as the New Year began, as those working in the Operational Management team and throughout the factories have been made aware.
The CEO and President of Raisio, Pekka Kuusniemi, said: The divestment of the confectionery business is an important strategic step for Raisio towards a responsible forerunner focusing on healthy foods. Together with our already strong balance sheet, the proceeds from the deal enable extensive acquisitions that strategically fit our core business.”
Valeo Foods’ CEO is Seamus Kearney. He said, “We are very excited about the opportunities to expand and grow the acquired businesses through a combination of significant new capital and brand investment.”
The deal does, of course, have big financial implications on both sides. For Raisio, this deal is about changing the shape of their business more than it is about making a profit. They have announced that they are to write-down £8.3 million in their 2017 financial statements after calculating goodwill and brand values. They have also been looking into the fair values of their balance sheet items before making this change.
The firm is expecting to see a £43.5 million hit to its earnings before tax, amortisation, interest, and depreciation are taken into account. The sale of the confectionary side of the business cost them £33.6 million.
Net sales for the brands in question totalled £88.6 million in 2016. There are around 1,000 people in food jobs with Raisio who have been directly transferred to Valeo Foods under their new agreement.
Valeo are already a known figure in the European food and drink sector, with operations branching out of the UK and Ireland. They manufacture multiple ranges in various categories. These include snacking and sweet treat items, health and wellness, beverages, and baking and meal ingredients.
They already see annual sales of £620 million, which means that the purchase of the new brands is not as big a deal as it may seem – and also that the income from the lines will be very similar to what they are already used to dealing with. This makes the sale a good match for them, and will hopefully mean that they are able to produce good results.
This is perhaps the last merger from 2017, and it will herald a new beginning along with the New Year for both of the companies. For Valeo, the horizon surely holds higher profits and more purchasing power should they wish to acquire any other lines. For Raisio, the road ahead is more about changing their image to a healthier brand and making their consumers healthier along with it.
The trend towards consciously healthy eating is not a new one, but it is certainly gathering steam. With plenty of new regulations slated to come for sugary foods and drinks in particular, as well as salts, it could be the right time to decide whether you are in or out of the snacks and sweets trade. Committing to the future will be important on both sides.