Agreement Reached over Sale of VION's Ingredients Division08 October 2013
THE NETHERLANDS & US - VION has announced that a final agreement has been reached on the proposed sale of its Ingredients division. The move further assures the financing of an independent VION Food.
The Division has been acquired by industry colleague Darling International from the US Darling International will pay approximately €1.6 billion in cash for the full acquisition. Both companies complement one another fabulously both geographically and as far as their activities are concerned. Darling International is strong in the US, whilst the Ingredients division has leading positions primarily in Europe and around the world.
Darling International Inc. is North America’s largest and only publicly traded provider of rendering and bakery residuals recycling solutions to the food industry. The Company recycles beef, poultry and pork by-product streams into useable ingredients such as tallow, feed-grade fats, meat and bone meal, poultry meal and hides. The Company also recovers and converts used cooking oil and commercial bakery residuals into valuable feed and fuel ingredients. Headquartered in Irving, Texas, it controls over 120 locations and employs over 3,400 people nationwide. Darling International (DAR) is a listed company and its stocks are traded on the NYSE. For additional information on Darling International Inc., visit the Company’s website by clicking here.
VION Ingredients, part of VION N.V., operates in Europe and worldwide with 58 companies developing, processing and selling added value products from slaughterhouse by-products. These products such as gelatine, proteins and fats are successfully sold to a variety of B2B markets such as the pharmaceutical, cosmetics, food, feed, energy and technology industries. On the market, Ingredients is primarily known through its brands Ecoson, Rendac, Sonac, Rousselot and CTH. Ingredients, with its head office in Son, in the South of the Netherlands, employs approximately 5,700 staff.
Dirk Kloosterboer, CEO Ingredients, commented: "This is a special day. Darling International represents an eminently suitable partner that has been active in animal by-products for many years. It occupies leading positions on the North American market and we look forward to collaborating with Darling’s professionals. Both parties can learn a great deal from one another. This merger will create a robust, ambitious market leader. That is good news for our clients and our staff. Together we can then develop across the board on the global market."
The agreement on the proposed sale of Ingredients follows the announcement made on 24 April 2013 by VION’s board that it would make both main activities, Food and Ingredients, independent. The principal reason for this was that Food and Ingredients each serve their own markets and clients, face their own challenges, follow their own company strategies and only have limited overlap and synergy together.
Over the course of this year, VION has taken the steps necessary to arrive at full operational, organisational and legal independence for both Food and Ingredients.
When the sale is closed, Dirk Kloosterboer will step down as a member of VION’s Executive Board and will be put forward as a member of the Board of Directors at Darling. The transaction is now being submitted to all the institutions and consultation bodies involved and is expected to be completed in January 2014.
VION Food ensured of financing
In part thanks to the successful sale of Ingredients, the financing of an independent VION Food has now been further assured. The independence of VION Food will start with solid foundations, strong own capital and its own funding. Long-term agreements are currently expected to be concluded concerning the company’s financing with an international consortium of banks that specialise in food and agribusiness. This expresses the financial sector’s confidence in VION Food’s strong market position and its perspective for the future. The company assumes it will be able to announce the appointment of a new CEO Food in the very near future.
Over the coming years, VION Food intends to invest several of hundreds of millions of euros in the organisation’s further reinforcement. Over the course of 2013, a number of important steps have been taken in the Netherlands and Germany. All VION Food’s plans aim to reinforce the relationship with clients and livestock farmers as a reliable partner and to simultaneously arrive at healthy, sound returns. VION Food employs approximately 12,650 staff.
The proceeds of the intended sale of Ingredients will normalise the debt position of VION Holding N.V. and strengthen its equity. As already announced on 24 April 2013, as a one off the 2012 results were strongly influenced particularly by one off impairments (writing off of value), primarily with regard to former activities in the UK. In addition, further write downs were also taken in relation to other tangible and intangible assets, interest costs were high and the company accumulated substantial costs in connection with its restructuring.
All in all, this has led to a net result last year amounting to approximately €830 million negative as opposed to €14 million positive in 2011. This led to a decrease in equity in 2012 to approximately €100 million negative. Due to the sale of Ingredients, VION’s equity is now making a strong recovery and will total approximately €400 million positive. This further demonstrates the company has enough room to provide VION Food a solid financial foundation.
ZLTO will continue to be the shareholder of VION Food, a company with an important societal and agricultural position. ZLTO is conducting talks with Darling concerning permanent involvement with two of VION Ingredients’ Dutch companies, Rendac and Ecoson, with which it has traditionally maintained close ties. This will allow ZLTO to participate in the further development of Ecoson in the field of bio-energy and bio-phosphate production, as well as making the agricultural chain more sustainable.
TheMeatSite News Desk