July 6, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Malteries Soufflet, one of the world’s top three maltsters and a subsidiary of leading European agricultural group InVivo Group, announced it has come to an agreement to acquire Australia’s United Malt Group – the fourth largest maltster in the world – through a deal valued at approximately $1 billion. 

Malteries Soufflet was acquired by InVivo, a top French agricultural cooperative group comprising hundreds of cooperatives, in December 2021 in a deal that valued Soufflet at EUR 2.2 billion (US$2.49 billion) at the time. 

Soufflet operates on the international cereals market through its trading subsidiary Soufflet Négoce; is one of Europe’s biggest wheat millers; and is an expert formulator of specialized ingredients, designing enzymes and sourdough. The group also is a major manufacturer of baked goods in France and Portugal, and has a presence in the fast food sector, employing 6,851 people in 19 countries generating 2019/2020 revenues of EUR 4.9 billion (US$5.5 billion).

This deal brought together two of the largest ag businesses in France, and resulted in a combined entity with sales totaling EUR10 billion (US$11.3 billion) at the time, from everything from grain trading to wine distribution.

When the acquisition was announced, InVivo made known its targeted intentions to corner 20 percent of the global market through external growth via deals already being considered in the U.S., South Africa, Australia, India, and South America. 

To help fund these ambitions, InVivo opened up capital in Malteries Soufflet, Soufflet’s malt division, with leading global investment firm KKR, Bpifrance, and Credit Agricole Group collectively investing EUR 440 million (US$498 million) to acquire a majority stake in the unit. 

The company also made a separate announcement that it had secured a bank loan totaling EUR 1.65 billion (US$1.87 billion) earmarked to partially cover future investments, according to Reuters.

United Malt

Currently listed on the Australian Stock Exchange, United Malt was spun out of global grain company GrainCorp in early 2020. Today, the company has plants and distribution centers across Canada, the U.S. Australia, New Zealand, and the UK, and an increasing presence in Asia. 

Under the terms of the acquisition agreement, United Malt has granted Malteries Soufflet a 10-week period of exclusive due diligence from the date of opening a data room populated with all, or substantially all, of the materials reasonably requested. 

If the scheme is implemented, United Malt shareholders will receive A$5 per share representing a 43 percent premium to the closing price on the ASX of A$3.44 as of March 23 2023. 

Once completed, the deal would create a global platform combining the complementary assets of the two companies in terms of geographical footprint and business segments, and would result in an annual production capacity of 3.7 million tons of malt. 

Malteries Soufflet also stated it would reinforce its presence in the UK and its footprint in strategic markets of the U.S., Canada, Australia, and New Zealand while enabling it to capitalize upon the expansion of the global malt market, positioning it to meet increasingly specific customer demands in terms of malt quality, carbon reduction and sustainability commitments. 

“Today’s announcement is completely in line with the strategic approach we designed for Malteries Soufflet in 2021 with our strategic partners, KKR, Bpifrance and Crédit Agricole Group,” said Thierry Blandinières, chairman, Malteries Soufflet and CEO, InVivo Group.

“The acquisition of United Malt is a unique opportunity to reinforce our presence in the high-value craft beer market, expand our geographical footprint to new strategic markets, and accelerate our ambitious strategy in the malt sector. A larger global platform would also enable customers to access increased resources and support their own growth ambitions. This acquisition would be a key step in our journey to becoming a global leader in the malt sector.” 

The directors of United Malt have already unanimously recommended that the company’s shareholders vote in favor of the scheme. Graham Bradley, chairman, United Malt, explained, “The United Malt Board believes that the Scheme Consideration appropriately reflects the value of our asset portfolio and the anticipated improvement in our near term earnings outlook. The United Malt team will work closely with all of our stakeholders, including our employees, customers and suppliers to ensure their interests are appropriately taken into account during the Scheme process.”

This sentiment was echoed by Mark Palmquist, managing director and CEO, United Malt, who added, “The Scheme, if implemented, will provide an attractive value outcome for United Malt Shareholders.” 

Malteries Soufflet is one of the world’s leading malt producers, operating 28 malt houses across Europe, Latin America, Asia and Africa and is a strong complement to our business. If the Scheme is implemented, United Malt will have the opportunity to build on its strategic progress since the demerger and leverage the combined strengths and larger platform of both businesses to further capitalize on key growth opportunities.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag News. She can be reached at lkiernan-stone@globalaginvesting.com.

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