CSM confirms sale of bakery units to Rhône Capital


Financier Worldwide Magazine

May 2013 Issue

May 2013 Issue

Following a near year-long search for a buyer, CSM nv announced in March that it had reached an agreement with US private equity firm Rhône Capital for the sale of its bakery supplies businesses.

According to a statement released by CSM, the enterprise value of the sale will be approximately $1.36bn. The company expects the net cash proceeds of the sale to be around €850m. The deal is expected to close in the third quarter, subject to regulatory approval in both Europe and the US. Shares in CSM rose 7.7 percent in trading immediately following the announcement.

CSM,based in Diemen, Netherlands, first announced its intention to divest the businesses – which sell bakery ingredients and ready-made goods to bakeries, food-service outlets, restaurants and supermarkets – in May 2012. 

The decision to sell CSM’s European, North American and international bakery supplies businesses, was taken following a review of the company’s future strategy and financial resources, which was completed in 2012. CSM felt that it no longer had the necessary funds to expand the bakery businesses while increasing its focus on lactic acid, a product the company uses in a range of goods including salad dressings, beverages and household detergents. CSM also cited weak consumer spending and high raw material prices for the decision to shed the bakery businesses. 

In a statement, CSM noted that the company’s board felt that the sale was in the best interests of its stakeholders, including its employees and customers. Earlier in March the company had downgraded the value of its European bakery units by €165m.

The divested bakery units, which employ a total of 8220 employees, grew 6.3 percent in 2012 with aggregate sales of €2.56bn and aggregate earnings before EBITDA, excluding one-off costs, of €106.8m. By comparison, the remainder of CSM’s business grew 7.1 percent during the period. CSM’s chief financial officer Nicolaas Kramer stated that the divestiture of the bakery businesses will result in the company incurring one-time costs between €10m and €15m, though he does not expect any further costs at a corporate level relating to the sale. Under the terms of the deal Rhône will also acquire the CSM brand name.

Gerard Hoetmer, chief executive of CSM, said “The intended divestment of our bakery supplies businesses is a milestone in the development of the company.” The sale of the bakery businesses represents a significant step in the transformation of CSM, and the company intends to convert itself into a bio-based ingredients and solutions firm. The company’s new direction and the sale of the bakery units were both ratified by CSM’s shareholders at an extraordinary general meeting held in July 2012.

Following the sale announcement, Mr Hoetmer reaffirmed to analysts what the company had stated in May 2012, noting that CSM will use the proceeds of the sale to make bolt-on acquisitions, return some funds to shareholders, pay for pension liabilities, and reduce existing debt. 

Steven Langman, managing director of Rhône Capital, said “We are proud to succeed CSM nv in stewardship of the bakery supplies businesses. We look forward to building on the foundation of the bakery supplies businesses’ product innovation capabilities, valued customer relationships and skilled workforce, and to support existing management in its global growth.” Rhône Capital, the investment arm of the Rhône Group LLC, currently manages more than €3bn worth of assets. The firm specialises in mid-market leveraged buyouts and PE investments in companies with a pan-European or pan-American presence. 

Rhône, which was established in 1996, has a portfolio of investments in a number of firms across the consumer, chemical, energy, industrial material, mining and shipping sectors. In 2011 Rhône paid over €900m for the carbon black unit of German chemical manufacturer Evonik Industries.


Richard Summerfield

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