Effective 19 November 2014, Raisio Group acquired the Benecol business in the UK, Ireland and Belgium from Cilag GmbH International and amended its agreement concerning North American rights to Benecol with McNEIL-PPC, Inc. Both Cilag GmbH International and McNEIL-PPC, Inc. are part of the Johnson & Johnson Family of Companies. In the UK and Ireland, Benecol is the market leader in cholesterol-lowering functional foods. The acquisition is estimated to increase Raisio’s EBIT by some 9 million euros annually.
“Benecol is a globally well-known cholesterol-lowering functional food brand owned by Raisio. The acquisition of the Benecol business in the UK, Ireland and Belgium as well as the amended agreement in the USA strongly support Raisio’s growth strategy with its branded business. In terms of Benecol products, Raisio’s long-term strategic goal is to enhance competitiveness in the existing markets, to expand into new markets as well as to innovate new products. Through this arrangement, we will have the opportunity to develop Benecol business on our own terms, following our strategic objectives,” says Raisio plc’s CEO Matti Rihko.
Cilag GmbH International has had the exclusive right to sell and market Benecol products in the UK, Ireland and Belgium. With the acquisition, rights to the Benecol trademark and plant stanol ester patents held by Cilag GmbH International will return to Raisio. The US business is included in the deal, but McNEIL-PPC, Inc. will continue as Raisio’s licensee for the time being. The amended agreement allows for the return of the Benecol rights and transfer of certain US assets to Raisio or its possible new licensee at a later date. For the first time since 1997, Raisio will have all the rights to the Benecol brand and plant stanol ester, the Benecol product ingredient. This allows Raisio to develop the business globally on a new basis.
The purchase price for the business and stocks totalled EUR 88.4 million, which was paid as the object of the deal transferred to Raisio. The completion of the deal does not require an approval from the competition authorities. Raisio financed the acquisition by a long-term loan of EUR 80 million.
This arrangement meets the criteria that Raisio has set on its acquisitions and is in line with the company’s vision focusing on healthy and ecological snacks. Furthermore, EBITDA/EV factor is also in accordance with Raisio’s acquisition policy.
Majority of the purchase price is allocated to intangible assets. On 30 September 2014, goodwill amounted to EUR 116 million on Raisio’s consolidated balance sheet. With the deal, it will increase by approximately EUR 53 million. The Group’s equity ratio will be approximately 58 per cent when the acquisition is completed. Raisio’s equity ratio was 70 per cent on 30 September 2014. Acquisition-related costs of approximately EUR 0.7 million will be recorded as a one-off item in the fourth quarter of 2014.
With the acquisition of the Benecol business in Europe, a few employees will join Raisio in the UK. In 2013, net sales of Benecol in the acquired European countries and USA were approximately EUR 76 million, of which the UK and Ireland accounted for some 85 per cent. In the UK and Ireland, Benecol products are market leaders in cholesterol-lowering functional foods.
Plant stanol ester of Benecol products has been chosen one of the world’s most significant nutritional innovations. Benecol products are sold in almost 30 countries on five continents. Benecol® is Raisio’s trademark and plant stanol ester the company’s widely patented ingredient of Benecol products. Benecol products account for about a fifth of the total consumer market for cholesterol-lowering functional foods worth approximately one billion euros.