Paris | Reuters — Co-operative group InVivo has entered exclusive talks to acquire family-controlled Soufflet in a deal that would create one of Europe’s biggest agricultural businesses with 10 billion euros (C$15.5 billion) in sales, the French firms said on Wednesday.
The potential consolidation comes as France, the European Union’s largest agricultural producer, is trying to embrace environmentally conscious farming practices while vying with cheaper grain suppliers such as Russia.
A tie-up could also let InVivo, a grouping of 192 farmer-owned co-operatives, and century-old Soufflet better compete with rivals such as U.S. group Cargill and Germany’s BayWa.
“The combination of InVivo Group and Soufflet Group would lead to the creation of a French champion in agriculture and agribusiness with an international footprint,” they said in a statement.
A deal would bring together their international grain trading activities while also associating complementary businesses with limited overlap, including Soufflet’s flour milling and malt production and InVivo’s wine distribution and garden retail, they said.
The transaction price was not disclosed.
The deal, under which the Soufflet brand would be preserved, could close by the end of 2021, they said.
‘Positive for France’
The talks were welcomed by French Economy Minister Bruno Le Maire, who said in a statement sent to Reuters that “the creation of this group would be positive for France and French agriculture.”
That contrasted with Le Maire’s initial opposition to a takeover approach for French retailer Carrefour SA by Canadian convenience-store operator Alimentation Couche-Tard, with the minister citing food sovereignty concerns.
InVivo said it expected to finance the acquisition through its own funds, bank loans and potentially by selling stakes in some activities to partners.
InVivo has in recent years sold its animal nutrition division Neovia to U.S. agribusiness group Archer Daniels Midland, while expanding its garden retail business and entering wine merchandising.
It restructured its grain trading unit after losses, and developed a wheat and barley trading joint venture, Grains Overseas, with two other co-operative groups.
Soufflet has been the subject of takeover rumours in the past, partly because of the lack of a family successor to take over from Michel Soufflet, board chairman, and his son Jean-Michel, who is chief executive.
InVivo would maintain Soufflet as a separate entity within the group and no asset sales were planned, InVivo said.
Current Soufflet management would stay for a transition period expected to last a few years, it added.
— Reporting for Reuters by Sybille de La Hamaide and Gus Trompiz in Paris; additional reporting by Gwenaelle Barzic.