Olam Food Ingredients, through its subsidiary Olam Americas, has acquired US-based chile pepper business (CPB), Mizkan America for US$108.5 million ($144.0 million).
This includes an estimated net working capital of US$55.0 million, subject to net working capital adjustment at closing.
The move comes as Olam Food Ingredients seeks to meet the rising demand for bold, authentic flavours by expanding its Spices portfolio (Olam Spices), says the group in a statement on Dec 21.
Mizkan America, which is based in Deming, New Mexico, is a major maker of condiments and sauces based in the US, and known for its high-quality New Mexico green chiles as well as other specialty chile peppers.
This is the first major acquisition for Olam Food Ingredients after Olam’s reorganisation, and is “in line with its strategy to provide customers with on-trend food products and sustainable, natural, value-added ingredients and solutions”.
The consideration was arrived at via a closed bidding process, and will be funded by a combination of Olam’s internal accruals and existing debt facilities.
SEE:Olam secures $348.4 mil sustainability-linked loan, third in two years
The transaction is subject to US antitrust regulatory approval and customary closing conditions which are expected to complete in January 2021.
“Formerly known as Border Foods, CPB has been the leading chile pepper business in the US for nearly 50 years. Combining CPB’s specialty and green chile range with our red chile portfolio (which includes paprika, chile powder and chile pepper) means we can deliver a wider range of ingredient solutions for customers looking to satisfy the rising demand for authentic Mexican flavours – already the third most popular cuisine in the country,” says Olam Spices CEO Greg Estep.
“We are further pleased that in operating CPB, Mizkan shares the same focus on sustainable agriculture and quality control, maintaining close farmer relationships and fully integrated supply chains. This also allows Olam Spices to strengthen and expand our chile sourcing network — notably in Hatch Valley, New Mexico. With the CPB senior executive leadership at the helm, supported by an outstanding group of employees committed to excellence, we will continue to grow the business even further,” he adds.
“CPB’s chile operations are second-to-none, with a strong heritage, steady financial performance and leading shares for all its products. Further, CPB supplies grocery and retail channels that offer increasing co-manufacturing opportunities in the US and Asia for many of our other products,” says Olam Food International CEO A. Shekhar.
“The addition of CPB’s range of premium green chiles will also broaden and strengthen OFI’s portfolio in plant-based solutions, which continue to gain popularity among consumers. For example, working with OFI’s innovation team we can produce a nutbased cheese that has a jalapeño flavour kick,” he adds.
Shares in Olam closed 4 cents lower or 2.5% down at $1.55 on Dec 18.