Bell Food Group acquired a majority stake in Hügli when it took control of Dr. A. Stoffel Holding last week. Stoffel has 50.2% of share capital and 65% of the voting shares in in the Steinach-based ready meals maker. Bell simultaneously launched a tender offer for the remaining share capital at CHF915 per share, a 60-day premium of 14.4%.
The deal is a further example of Bell’s determination to increase its exposure to what it termed the “high growth high margin” European convenience sector through M&A. The company, which also has a stake in Swiss retailer Coop, closed the acquisition of fresh convenience group Hilcona late last year. In 2016, the firm gobbled up Swiss salad maker Eisberg.
Bright outlook for convenience foods
Data cited by the company shows convenience foods and soup sales in Europe increased by a compound annual growth rate of 3% between 2010 and 2016.
This rate is expected to continue through to 2021 with incremental growth expected in less well developed markets for convenience foods. “Convenience food is very much established in countries like the UK or Switzerland. In other countries, it has just started or is by comparison at a low level,” the spokesperson explained.
Bell said the transaction will make it “one of the leading suppliers of convenience food in Europe.”
This latest acquisition will mean Bell generates around 25% of sales in convenience the company noted. Charcuterie will remain the company’s largest segment, closely followed by fresh meat and convenience.
Stepping up sales
A spokesperson for the company told FoodNavigator the acquisition will be margin accretive, with value-added convenience sales strengthening Bell’s price mix.
However, Hügli’s recent top-line performance has come under pressure. In the first half of 2017, the company revealed organic sales dropped by 3.5% sue to a “temporary setback” in its key accounts business.
While Hügli said it expects organic trends to pick up in the back half of this year, the company nevertheless flagged broader pressures facing European food makers. “The entire European foodstuffs market is currently under severe strain and a large number of manufacturers are facing volume declines,” Hügli noted.
In the face of challenging market trends, many food makers will look to M&A to support profit growth, with greater scale and integration offering cost savings. This is not Bell’s motivation, the company stressed.
Bell is confident that Hügli’s sales outlook remains bright. Under Bell’s plan, Hügli will continue to operate on a stand-alone basis, sharing HR, administration, IT and finance services. While Bell said there are some opportunities to generate “procurement, production network, logistics, management” savings, the company insisted that the acquisition is more about market possibilities. Bell revealed it will leverage cross-selling opportunities to support expansion.
“Hügli is already very lean. There will be some opportunities but the focus is on market opportunities. There are sales synergies, indeed. Hügli’s sales within the group are relatively low and group’s needs already very consistent,” the spokesperson said.
Additionally, Bell expects its existing portfolio to benefit from opportunities to feed into Hügli’s foodservice operations. Hügli also has a manufacturing and distribution presence in markets where Bell is not currently present, such as the UK, while Hügli could also benefit from additional market reach in France and the Benelux countries.