Petra Foods in Dispute With Barry Callebaut On Cocoa Unit Sale

22 Oct 2013 --- Singapore's Petra Foods Ltd. (PEFDF) has said it is in dispute with Switzerland-based Barry Callebaut AG after the cocoa and chocolate products maker sought a pricing discount for Petra's cocoa unit that Barry Callebaut agreed to buy in December 2012.

Petra Foods noted that on September 23, Barry Callebaut sought a reduction of $98.29 million in the deal's closing price. However, Petra Foods said it considers the price adjustments sought by Barry Callebaut do not have a proper or valid basis and have not been properly substantiated or justified.

Petra Foods said in December 2012 that entered into a conditional sale and purchase agreement for the sale of its cocoa unit to Barry Callebaut for $950 million. The proposed sale comprises Petra Foods' entire cocoa ingredients business including seven factories in Malaysia, Indonesia, Thailand, Brazil, Mexico, Germany and France, as well as major sales offices in Singapore, Netherlands and the U.S.

However, in July 2013, Petra Foods said it completed the sale of its entire cocoa ingredients unit to Barry Callebaut for estimated sales proceeds of $860 million. The company noted at that time that the reduced sales proceeds were due primarily to a lower level of working capital by about $74 million delivered at completion.

“With reference to the public announcement of Petra Foods Ltd. dated October 21, 2013, Barry Callebaut states that it has submitted the completion statement in accordance with the Share Purchase Agreement (SPA) to Petra Foods. This would result in an adjustment payment from Petra Foods to Barry Callebaut in the amount of up to USD 98 million and would further reduce the total consideration of USD 860 million communicated on July 1, 2013,” Barry callebaut responded in a statement.

Petra Foods disputes Barry Callebaut’s claim to such an adjustment payment. The two parties will now have to apply the dispute resolution mechanism foreseen in the SPA.

“This dispute related to the final purchase price does not affect in any way the operational performance or the integration of the recently acquired cocoa business; it will however affect the calculation of the final purchase consideration and goodwill,” Barry Callebaut reported.