Investment firm SHV bids US$3.4B for feed firm Nutreco

Amsterdam | Reuters –– SHV, a family-owned Dutch investment firm, has reached a conditional agreement to buy animal feed and nutrition company Nutreco for 2.7 billion euros (US$3.4 billion), expanding into food-related businesses.

The offer of 40 euros per share is a premium of 42 per cent to the stock’s closing price on Friday and is conditional on SHV acquiring all Nutreco shares. It could also be terminated if a third party were to bid eight per cent or more above the offer price.

Nutreco, which is based at Amersfoort and had 2013 sales of 5.2 billion euros, said it received guarantees from SHV that it would continue its growth strategy, including acquisitions, and that it would keep its headquarters in the Netherlands.

“SHV will be an excellent partner, enabling us to maintain our corporate identity, culture, values and organization,” said Knut Nesse, CEO of Nutreco.

Nutreco has operated in Canada in 2007, when it bought feed companies Shur-Gain and Landmark Feeds from Maple Leaf Foods to create a Canadian business group dubbed Nutreco Canada, headquartered in Guelph.

Shur-Gain, founded in 1937 as part of Canada Packers, was taken over by Maple Leaf Mills in its merger with Canada Packers in 1990. Landmark Feeds, set up in 1954, was bought up by Maple Leaf Foods in 1999.

The two companies, between them, run livestock feed and pet food plants in Quebec, Ontario, Manitoba, Alberta, New Brunswick, Prince Edward Island and New York state, and operate 13 retail outlets in Atlantic Canada.

Under the terms of the agreement, SHV, which has its roots in a 19th century coal trading company, will pay for the acquisition in cash from its own financial resources.

Explaining the deal, SHV said that Nutreco, which makes livestock, chicken and fish feed, had strong management and good growth prospects in emerging markets.

By the close of trading on Monday, SHV said it had purchased more than five per cent of Nutreco’s outstanding shares, which rose 39.5 per cent in Amsterdam to just below the offer price.

SHV currently operates in sectors including cash-and-carry wholesale with the Makro brand, energy distribution, transport and industrial services. It is active in 50 countries and employs approximately 47,000 people.

The offer for Nutreco, which employs 10,000 people in 30 countries, is expected to open in the final quarter of 2014 and Nutreco’s executive and supervisory boards recommended shareholders accept it, the companies said in a statement. It is subject to regulatory approval.

“It is important for SHV that it ultimately acquires the entire outstanding share capital of Nutreco,” a statement said.

“If SHV acquires 95 per cent of the outstanding shares of Nutreco, Nutreco intends to delist from Euronext Amsterdam expeditiously.”

If Nutreco were to terminate the acquisition and pursue a rival deal it would pay a one-off fee of 25 million euros.

ING Corporate Finance is acting as financial adviser to Nutreco. Leonardo & Co. is acting as independent financial adviser to the Supervisory Board of Nutreco. De Brauw Blackstone Westbroek is acting as legal adviser to Nutreco.

Lazard is acting as sole financial adviser to SHV. Allen & Overy LLP is acting as legal adviser to SHV. Bain & Company is acting as strategy adviser to SHV. Deloitte is acting as tax and financial due diligence adviser to SHV.

— Anthony Deutsch is Reuters’ Netherlands bureau chief, based in Amsterdam. Includes files from Network staff.

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