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News 2092 views last update:6 Aug 2012

Cargill snatches Provimi

Cargill has made a binding offer of $2.14 billion or €1.5 billion to acquire Netherlands-based feed company Provimi from private equity fund Permira.

Provimi has agreed, on an exclusive basis, to commence the necessary Works Council consultations and appropriate regulatory approvals.
 
Cargill has a long history in the animal nutrition business, dating back to feed sales in 1865. The privately held company currently has a presence in 63 countries, employing 130,000 people worldwide.
 
Cargill beat rival bids from China’s New Hope Group. With the exclusive Cargill deal the Dutch duo bidding of chemicals company DSM and animal feed company Nutreco is no longer of interest.
 
Both Cargill and Provimi said the key factor in the deal was the complementary nature of the two companies’ markets and product lines. Provimi is strong in premixes and Cargill is more devoted to complete feeds, which is sold in combination with nutrition service as a package to farmers.
 
Cargill’s vice-chairman Paul Conway said that apart from the products they were particularly interested in the value added piece of Provimi, such as the R&D and go-to-market capability.
 
Ton van der Laan, Provimi’s CEO, said that Cargill was the best fit for Provimi because its markets are largely complementary. Provimi has operations in 26 countries, with particular strength in Latin America, Russia and India, while Cargill is stronger in developed countries and China.
 
“With Cargill's global presence and committed focus on animal nutrition, we can take Provimi to the next stage of its development. […] Cargill can offer many opportunities and recognizes the talent within Provimi,” he said.
 
Four years with Permira
Provimi became part of Permira in spring of 2007 when the latter bought a majority stake in Provimi in a €1.3bn secondary deal from CVC Capital Partners and PAI Partners and later delisted it from the Euronext stock market.
 
The UK buy-out brought in new managers and turned the group, which started as a trading company for Dutch farmers in the late 1920s, into a pure-play animal feed provider for farmers.
 
Provimi in the past four years focused more clearly on feed for food animals by acquiring pig and aqua feed manufacturer Nassa in Mexico last year and thus broadening is global presence. In March this year the company sold its pet food business to private equity group Advent International.
 
The Provimi Group is active worldwide in several types of animal nutrition and is a leader in all markets where it is present. It employs about 7,000 people and had annual sales of €1.6 billion in 2010. Provimi has 67 production centres in 26 countries and exports to over 100.
 
Cash loaded Cargill
Cargill’s balance sheet is heavy with cash. With so few matching companies on the market it is challenging how to reinvest all that capital. In the most recent fiscal year Cargill earned a record $4.2 billion, and in May it closed a $24 billion deal to divest its stake in Mosaic, the US fertiliser company.

Dick Ziggers

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