ForFarmers buys Belgian feed company and moves up the rankings

By Jane Byrne contact

- Last updated on GMT

© GettyImages/SuslO
© GettyImages/SuslO
ForFarmers says it has moved to shore up its position in the Belgian market by acquiring Voeders Algoet for around €14 million or seven times the Belgian feed company’s EBITDA.

That feed company is located in Zulte, close to the Belgian ForFarmers sites. It sells around 150,000 tons of compound feed, targeted at swine and ruminant farmers.

Voeders Algoet generated sales of around €40m in the split financial year (1 July to 30 June) 2016/2017, and had an operating result before amortization and depreciation (EBITDA) of approximately €2m, reported ForFarmers.

The Belgian feed producer's current management and 22 staff will be taken on by ForFarrmers, with the merged entities to constitute the second largest feed company in that market. The deal, though, is subject to the standard regulatory approval by the Belgian competition authorities, among others.

ForFarmers CEO, Yoram Knoop, has had market consolidation tactics in mind for a while in relation to Belgium. In 2015, he told this publication: “We recognize that in order to consolidate our position in markets such as Belgium and Germany, further acquisitions will be required. So asset building certainly remains the focus in those countries.”

The acquisition of Voeders Algoet comes on the heels of the 60% stake ForFarmers took in Polish poultry feed company, Tasomix, in February this year. Moreover, on July 2016, it bought out VleutenSteijnVoeder, a Dutch feed producer focused on swine production, predominantly in the South East of the Netherlands. 

War chest

When asked how the Dutch group is able to maintain such a pace of asset building, Caroline Vogelzang, director of investor relations and corporate communications at ForFarmers, told FeedNavigator that mainly due to a combination of focusing on being cost efficient at the company and a prudent approach to investments and despite the fact that the company spent some €60m on a share buyback scheme, at the end of 2017 ForFarmers reported a positive cash position of €67m on its balance sheet. The company has access to its funding facility, a banking arrangement, and could leverage this facility to provide the company with a war chest of an additional €200m, she added.

We have continued to generate cash since the end of last year, so we have enough funds for acquisitions, and they are a fundamental part of the company’s strategy,” ​she said.

Vogelzang said while it is all very well being financially solid, it is also important for a company to be able to identify the right acquisition candidates as well, and ones that are aligned with the businesses’ way of working, its culture.

“We know our competitors and we are always speaking to companies in the markets in which we operate.”

Steven and Olivier Algoet, the current owners of Voeders Algoet, weighing up the future of their company recognized the consolidation trend within the agribusiness and feed sector and saw a potential merger of the two firms as the best step forward for their business, she said.

ForFarmers sees Voeders Algoet as a “jewel​” in the proximity of its existing business that will enable it enhance both its production and transport of compound feed in Belgium, particularly as it also acquired 12 bulk trailers in the deal, said Vogelzang.

“Selling the product in a country is one thing, having to organize transportation of feed in a market is quite another. ForFarmers didn’t have its own transport fleet in Belgium prior to this, feed transport was done by a third party. Having access to our own fleet will help us further optimize the whole supply chain.”

As part of that optimization process, Voeders Algoet’s feed production will most likely be transferred to the existing ForFarmers factories in Izegem and Ingelmunster.

Finalization of the deal is likely to take place in the second half year of 2018. Integration of the two companies will begin then, but could take anywhere from six to 24 months, said Vogelzang.

The sales teams from the respective businesses will meet each other and resources will be allocated immediately but we will also have to look at how we are going to optimize production while keeping in mind that the customer must remain central in all of that.”

ForFarmers has not ruled out looking for future acquisition candidates in Belgium, in an effort to further consolidate its position there, she added. 

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