LATAM bakery boost: Corbion to acquire Granotec do Brazil in US$45 million deal

25 Mar 2019 --- Corbion is planning to buy Granotec do Brazil, a specialist in functional blends for the Brazilian bakery industry, in a deal worth US$45 million. This acquisition is aligned with Corbion’s objectives as part of its “Creating Sustainable Growth” strategy, notes Corbion CEO, Tjerk de Ruiter, who says that part of the attraction is the company’s state-of-the-art manufacturing and R&D facilities. He believes that the move to buy the “top-three Brazilian bakery ingredient player” will provide an excellent platform for growth for Corbion’s South America bakery solutions business.

“With our contacts and international presence, and our experience in US bakery solutions we will be able to further develop the business of this top-three player in bakery ingredients in Brazil. Our South American management team has built a strong track record of above-market growth in other segments such as meat,” he tells FoodIngredientsFirst.

This morning, Corbion announced that it is strengthening its position in food ingredients in Latin America (LATAM) by acquiring full ownership of Granotec do Brazil. The deal is pegged as part of Corbion’s strategy to expand the bakery business and extend the North American bakery solution provider model into LATAM.

Given that industrial bakeries are Corbion’s core customer group, de Ruiter believes that South America provides an attractive growth opportunity for the company to leverage its market-leading position in North America.

“The market size of the Latin American bakery market is roughly equal to that of the North American market. However, the rate of industrialization is significantly lower in South America (30 percent) versus that of North America (70 percent),” he adds.

De Ruiter notes continued positive development of the company’s business in LATAM. “This acquisition will provide us with a platform to serve our customers even better,” he explains. “Granotec do Brazil greatly complements Corbion's capabilities and geographical footprint to provide sustainable ingredient solutions in this region.”    

Headquartered in Curitiba, Paraná State, Brazil, Granotec do Brazil employs around 120 staff and operates a production facility and a development center.

The cash purchase price for all shares of Granotec do Brazil is US$45 million. In 2018, the company reported sales of approximately US$26 million and an EBITDA of US$3.7 million. The acquisition will be financed from existing Corbion debt facilities and integrated into Corbion's existing Brazilian organization. 

Completion of the transaction is expected later this year following regulatory approvals. 

The acquisition comes just weeks after Corbion revealed a decline in 2018 growth, impacted by inflationary pressures. 

Corbion, which is a key producer of bioingredient-based foods, chemicals derived from organic acids, and lactic acid based solutions reported net sales of €897.2 million (US$1.01 billion) in 2018. Organic net sales growth was 3.7 percent for the year. EBITDA excluding one-off items in 2018 decreased by 19.8 percent to €131.6 million, mostly due to the acquisition of the TerraVia assets and a negative currency impact. 

At the time Corbion reported that its 2017 acquisition of algae business TerraVia was still impacting the company’s results, but inroads into the salmon feed market were also reported. Meanwhile, in the Food segment, growth was a balance of a strong performance in Meat, a weak (albeit improving) performance in Bakery, and slight growth in Other (Beverages, Confectionery and Dairy). 

By Gaynor Selby