Origin sells Valeo stake, acquires two Romanian firms

The Irish-listed agri-services group Origin Enterprises has announced the disposal of its 32 per cent stake in Valeo Foods to CapVest Partners in an €86 million deal.

Valeo was established in September 2011 after Origin and the food company Bachelors merged in a deal valued between €140 million and €150 million.

Origin said it had received a total cash consideration of €86.6 million in connection with the transaction. This comprises €42.5 million in respect of the disposal of the group’s 32 per cent shareholding and €44.1 million in full settlement of a vendor loan note, which relates to a €35 million deferred consideration stemming from the 2011 merger.

Under the terms of the transaction Origin will dispose of Origin Foods to Valeo based on an enterprise value of €78m. Origin will hold a 45 per cent equity interest in Valeo, receive cash consideration of €26m on completion and deferred consideration of €35m as a vendor loan note.

Valeo owns a number of top Irish brands including Jacobs, Batchelors, Odlums, Rowse, Kelkin, Robert Roberts, Roma, Shamrock, Chef and Erin. The company, which is the largest ambient food supplier to the grocer trade in Ireland, employs over 750 people across Ireland and the UK.

Origin said its share of profit after interest and tax from Valeo is expected to average €6.5 million for the three years to July 31st. In addition interest earned on the vendor loan note will average €2.1 million for the same period. The carrying value of the group’s investment in Valeo at he end of January amounted to €67 million inclusive of a cash equity amount of €22 million.

The group said proceeds from the disposal will be used initially to reduce debt and ultimately for investment in agri-services.

“The transaction furthers the group’s capital reallocation objectives while tightening Origin’s strategic focus as we prioritise the further development of Agri-Services,” said chief executive Tom O’Mahony.

Separately, Origin said it had reached agreement to acquire the Romanian agri-service firms Redoxim and Comfert for a combined €54.4 million. The acquisitions are being funded from existing bank facilities and are expected to be earnings enhancing from the 2016 financial year onwards.

Redoxim, headquartered in Timisoara and founded in 1991, is a leading provider of agronomy services, macro and micro inputs to arable, vegetable and horticulture growers. The company employs over 190 people and it services approximately 2,000 customers through a distribution network of 55 retail outlets, and a team of 50 agronomists and product specialists.

Under the terms of the deal, Origin is to acquire a 100 per cent interest in Redoxim for a total cash consideration of €35 million. The transaction is expected to complete during September with an initial €31.5 million due then and with €3.5 million payable on the first anniversary of completion.

Redoxim announced revenue and operating profit before non-recurring items for the year ended December 31st, 2014 of RON 238.3 million (€53.6 million) and RON 24.7 million (€5.6 million), respectively.

Comfert, headquartered in Bacau and founded in 1998, is a similar business which employs over 180 people and operates through a distribution network servicing approximately 1,900 farming customers via a team of 32 agronomists and product specialists.

Origin is to acquire 100 per cent of Comfert based upon an enterprise value of €19.4 million. Additional deferred consideration will be payable based upon the achievement of specific annual profit targets over a five-year period following completion. The transaction is expected to complete during October.

Comfert reported revenue and operating profit before non-recurring items for the year ended December 31st, 2014 of RON 447.2 million (€100.6 million) and RON 14.4 million (€3.2 million), respectively.

“Redoxim and Comfert represent an excellent strategic fit for Origin providing complementary expertise, meaningful geographic extension and strong brand reputation on-farm,” said Mr O’Mahony.

Origin is due to issue its full-year results on September 23rd.