Midsona AB (publ) (“Midsona”) has reached an agreement for the acquisition of German company Davert. The M&A transaction, which has been advised by ONEtoONE Corporate Finance and Seufert Rechtsänwalte on seller´s side and Strata Advisory AB, Heuking Kühn Lüer Wojtek and Fredersen Advokatbyrå AB by on buyer´s side, involves the acquisition of the German leading company in the organic food market with a turnover that exceeds 60 million euros per year. The total purchase price is approximately EUR 48.5 million (~SEK 511 million), on a debt-free/cash-free basis, and will be paid in cash1.
Midsona holds a strong position in the Nordic market with own strong brands within health foods, personal care and hygiene. Midsona also sells a number of licensed internationally established brands. Our products are sold through grocery and convenience stores, pharmacies, health stores and internet. Midsona’s priority trademarks are: DALBLADS, FRIGGS, HELIOS, KUNG MARKATTA, MIWANA, NATURDIET, ESKIMO-3 and URTEKRAM. Midsona has annual sales of about MSEK 2,173 (2017). The Midsona share (MSON) is listed on NASDAQ OMX Stockholm, Mid Cap.
Founded in 1984 by Rainer Welke, Davert is a pioneer in the organic food industry in Germany. The Company is a leading manufacturer and distributor of organic dry packaged food, offering products under its own Davert brand as well as private label products. Davert’s portfolio includes a broad range of organic products in categories such as convenience products, snacks, superfoods & nuts, breakfast cereals, rice and pulses. Davert’s products are sold through various channels including grocery stores, drugstores, health food stores as well as to the food services industry.
In recent years, Davert has launched a new brand design, broadened its product portfolio and extended its distribution. In this period the Company also moved into a new, purpose-built production facility and significant investments were made in state-of-the-art manufacturing lines and an automated warehouse. Davert has approximately 150 employees, all of which are located at its facility in Ascheberg, North Rhine-Westphalia, Germany. Sales in 2017 were EUR 64 million (~SEK 616 million).
Financial Effects of Acquisition on Midsona
For the financial year 2017, Davert achieved sales of EUR 64 million (~SEK 616 million) and adjusted EBITDA of approximately EUR 4.4 million (~SEK 42 million). For the current financial year, Midsona expects Davert’s sales to increase compared to the previous year and to achieve adjusted EBITDA of approximately EUR 5.0 million (~SEK 53 million). Not taking into account any transaction-related costs, financial or synergy effects, the purchase price would represent a current year EV multiple of approximately 9.7x EBITDA.
Synergies are anticipated to be realized in areas including production, cross-selling and procurement. By 2022, these synergies are expected to have an annual impact on EBITDA of approximately EUR 3.8 million (~SEK 40 million). Initial synergies are expected to be realized during 2019. Midsona has financed the transaction with a new debt facility.
(1) The purchase price excludes: (i) a capital investment in a new production line of EUR 8.5 million and (ii) potential payments between April 2020 and 2022 of up to EUR 6 million in aggregate contingent on Davert exceeding specified financial targets. The capital investment will provide Davert with new production capabilities targeted at attractive, fast growing segments. The investment program is expected to be completed in late 2018.
Note: Purchase price and 2018 figures converted to SEK at exchange rate of 10.54. 2017 figures converted at 2017 average rate of 9.63.