Olam takes over UK food ingredients company for US$50mln

The Singaporean food products company’s acquisition of 100% in equity interests in Britannia Food Ingredients Holdings Limited and Britannia Storage and Distribution Limited will take place within the next three years.

Olam will initially acquire 85% of equity capital in BFI and 100% of BSD, and then acquire the remaining 15% interest in BFI within the three-year timeframe at a pre-agreed valuation.

The transaction involves the acquisition of BFI’s key assets and processing capabilities, which comprise melting plants, blending and refining facilities with a total capacity of 70,000 metric tonnes per annum.

The plant also has warehousing, tank storage, modern packing, R&D and analytical laboratories. The BFI facilities are located on a 7- acre plot of land that provides significant scope for expansion.

Established in 1996 in Goole, Yorkshire England, BFI is one of the leading independent suppliers of speciality fats to the confectionery and snack food industries in the UK. Their product categories include Cocoa Butter, Cocoa Butter Equivalents, Filling Fats, Reduced Saturate Frying Oils and Dairy Butter Oil.

BFI is an accredited ingredient supplier to the leading confectionery and food majors with an operating history of 15 years.

BSD, meanwhile, is a logistics service provider to the confectionery fats industry based in Goole and Ipswich. It manages warehousing facilities, tank storage and operates its own trucking services.

In a statement, Olam said the acquisition of BFI signifies “the continuous execution of Olam’s global cocoa strategy to integrate its supply chain into value-added midstream processing, including intermediate cocoa ingredients and serve the growing requirements of the global chocolate industry.”

Gerry Manley, Managing Director and Global Head for Cocoa, said the BFI investment will give Olam the ability to supply refined liquid deodorised cocoa butter and other specialty fats.

“We will [now] be in a position to provide a fully traceable integrated supply chain of cocoa products from bean sourcing, processing and final delivery to our customers,” he said.

Philip Nash, Managing Director of BFI, said: "It is my belief that the coming together of Olam and Britannia Food Ingredients will offer customers many exciting prospects for the future with each business complementing the other to present an integrated supplier to the confectionery industry.”

The acquisition, which would be funded through internal accruals, will be both value and earnings accretive from the first full year after consolidation.

BFI grossed a turnover of £119 million in FY2010 and is expected to deliver revenues of £150 million, equity IRR of approximately 39% and steady state ROE of around 34%.