Ter Beke has taken a 90% equity stake in KK Fine Foods, which will continue to be headed up by the existing management team under Samir Edwards. The remaining 10% of shares will be retained by existing shareholders.
In 2016, KK generated a turnover of €39.3m and – Ter Beke stressed – the company is generating double-digit growth annually. Financial details were not disclosed but Ter Beke said the valuation was done at “standard multiples” for the ready meal sector.
Announcing the strategic partnership, KK said that the investment will allow it to add an additional €44.3m-plus (£40m) of capacity over the next two years. KK is currently focused on expanding its production footprint and the company recently completed the purchase of a second manufacturing site.
Complementary product offerings
The deal will allow Ter Beke, which supplies lasagne and pasta-based meals, to expand in the UK market with the “benefits of an established management team” already in place.
The company noted that the UK ready meals market is the largest in Europe and CEO Dirk Goeminne stressed that Ter Beke views establishing a presence in the country as “vital” to the group’s strategy.
“I have met many passionate developers at KK Fine Foods and have had the good fortune of sampling their creations. Their passion for food is exceptional and one that should be nurtured. For that reason, we have made a conscious decision for KK Fine Foods to continue operating independently,” Goeminne said.
Edwards, KK’s managing director, added that innovation is a cornerstone of KK’s success and will remain a key focus for the group moving forward.
“The exciting thing for myself and the team is that we can continue to service our existing customers’ needs and provide them with the benefits of the additional capacity that we intend to build into the business over the next 12 months. Innovation and creativity really have been the cornerstone of KK’s successes to date and we intend on keeping this firm focus on where consumers want to go with their next meal.”
Edwards revealed that KK plans to leverage Ter Beke’s expertise in the pasta category. “Working with Ter Beke will allow us to invest into our core business, using the knowledge and experience that they have built up over many years within the pasta category, whilst also allowing us to accelerate our capital expenditure plans to ensure that we can react to a buoyant marketplace.”
Goeminne revealed that Ter Beke intends to leverage sales synergies and feed Ter Beke and KK products into each group’s distribution channels. The company also believes that KK will provide it with a foothold to expand in the foodservice sector.
“The takeover offers us a great opportunity to capitalise on the potential of KK Fine Foods by offering their products on the European mainland, and vice versa. To a degree, our product ranges are complementary. The most important products are lasagne and pasta dishes and that is a perfect tie-in with the current core range of products at Ter Beke.
“For Ter Beke, food service is another area which is ripe for exploitation and provides us with the perfect springboard on which to develop as a group.”
M&A ‘pushing boundaries’ for growth
According to forecasts from KVB Research, European ready meal sales are expected to grow by a compound annual growth rate of 10% through to 2023. The UK's CAGR is expected to stand slightly below this at 9.7% but growth is coming from a higher base.
Ter Beke is using M&A to grow its ready meals and processed meat businesses. The company said that its ambitious acquisition strategy is enabling it to “consolidate” its position in the European prepared meals category and “quite literally” push back the boundaries of its ready meals division.
In July, Ter Beke took control of France food maker Stefano Toselli and assumed full control of Poland’s Pasta Food Company. In combination, these two deals lifted Ter Beke’s ready meals revenue by €80m a year, the company revealed.
Last week, Ter Beke revealed plans to take control of the fresh foods business unit of Zwanenberg Food Group. This investment represents a €130.6m expansion for the company’s processed meats division.