Yildiz to sell Godiva’s Asian business to South Korean private equity

21 Feb 2019 --- Godiva Chocolatier, owned by Yildiz Holding, is to sell select Godiva assets to South Korean private equity firm MBK Partners as part of a global strategy to grow the business fivefold. No financial details of the deal have been disclosed, however reports value the transaction, which is set to close in the middle of the year, to be worth over US$1 billion. Godiva will use the proceeds to finance diversification, including an expansion of its cafe business from 20 stores to more than 2,000 globally in the next six years.

Under the terms of the transaction, MBK Partners will purchase the retail and distribution operations in four of Godiva’s 100-plus markets: Japan, South Korea, Australia and the future rights to develop New Zealand. The agreement has been approved by the Boards of Directors of both parties and the transaction is expected to close in mid-2019, subject to the customary closing conditions.

The deal includes Consumer Packaged Goods (CPG), digital-commerce, travel retail (for Japan and South Korea) and more than 300 retail stores as well as the Godiva production facility in Brussels, Belgium, that supplies product to these markets. All remaining 100-plus markets will continue to be owned and operated by Godiva, according to the company announcement.

“We have ambitious plans for growing the business five-fold in the next six years,” Carmen Chiu, Head of Global Corporate Communications at Godiva tells FoodIngredientsFirst. “This sale gives us the financial wherewithal we need to execute against that goal, expanding the Godiva brand from formal gifting to everyday indulgence through the launch our café concept, expand into other high growth markets likes the Americas, introduce a wider range of products from beverages to ice creams to baked goods, increase our emphasis with Consumer Packaged Goods portfolio throughout the globe, entering into new geographies and more.”

According to Chiu, this business strategy to contract a manufacturing operation and share market ownership is common practice among global brands, particularly those poised for expansive growth. “While we are not actively seeking to create similar arrangements in other markets today, it is our obligation to constantly evaluate new opportunities to grow our brand responsibly,” she adds.

Post-close, Godiva Chocolatier will retain exclusive brand ownership in all global markets, granting a perpetual license to MBK Partners. It will continue to own and operate the remaining markets in more than 100 countries. Godiva will continue to source its products from the Belgian facility, together with the production facility it owns in Pennsylvania, US, and its affiliate facilities in Istanbul, Turkey.

“Since 2008, we have been very pleased with the performance of Godiva, having nearly doubled its revenue and the number of stores operating globally and continue to see tremendous upside for this brand moving forward,” says Murat Ülker, Chairman of Godiva and Yildiz Holding.

“Realizing the potential ahead, together with Godiva leadership, we conducted a strategic review to explore new ways for generating the necessary cash flow to fuel the robust growth. This transaction is an ideal solution that provides the momentum to fuel expansion in other high potential areas of our portfolio,” he notes.

Annie Young-Scrivner, CEO of Godiva Chocolatier believes the deal is a win-win for everyone. “It gives us the financial flexibility we need to execute our growth strategy by accelerating efforts in new and existing markets and supporting the plan of opening of more than 2,000 cafes globally while preserving our Belgian legacy, quality and craftsmanship that have helped to make our brand iconic.”

Nurtac Afridi, Head of Strategy and M&A in Yildiz Holding, also comments: “We received remarkable interest from a dozen blue-chip investors, many of whom were actively engaged in the negotiation until the last rounds. We have long treasured the Godiva brand and believe it represents a significant upside for any investor.”

Commitment to Belgium operation and heritage
The structure of the deal will ensure the preservation of Godiva’s Belgian legacy as it continues to invest in the Belgian market. Godiva will maintain its European headquarters in Brussels, Belgium, continue to own and operate its Belgium retail stores, travel retail and CPG channels and uphold its Brussels-based Center of Excellence for R&D.

Godiva will also maintain exclusive rights to its iconic recipes, continue the development of chef-inspired creations and uphold its commitment to the Belgian craftsmanship that defines its premium brand. The factory in Brussels will continue to produce and export Godiva products globally under the ownership of MBK Partners. Godiva will retain its prestigious Belgian Royal Warrant to supply goods to the royal court.

Chocolate trends
According to Chiu, there are plenty of opportunities for chocolate brands to better meet the needs of today’s consumers. These include:

• Rewarding themselves everyday
• Giving gifts that are special and personalized
• Offering sharable, fun experience with others
• Opportunities for self-treat which is an important driver for consumers and it represents more than 40 percent of total chocolate consumption in the US and China.

“Health and wellness is also an untapped opportunity especially with dark chocolate in chocolate,” Chiu notes.

“Additionally, consumers are exploring new ways to elevate chocolate experiences through premiumization, personalization and elements of connoisseurship and craft. We also see opportunities to enter different needs states and day parts to create usage occasions for casual gifting such as birthdays and anniversaries,” she explains.

“Furthermore, with our introduction of the new Café concept, we have created a new and exciting menu that offers new experiences with products like Chocolate Mocha, Cookies that are inspired by some of our signature chocolate pieces. A Croiffle that is a croissant pressed in a waffle machine, with chocolate or savory filling,” Chiu concludes.

By Elizabeth Green

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