The M&A advisors that helped Spain's Virto acquire Holland's Oerlemans

10 October 2018

Oerlemans Food Group, a Dutch food company with around 700 employees, has been acquired by Virto Group, a Spanish producer and distributor of food products. The acquisition, which was advised on by M&A teams from six external consultancies, sees Virto add €90 million in sales to its financial footprint, lifting its total turnover to over the €400 million mark.

Founded in 1977, Oerlemans is a producer and supplier of freshly frozen vegetables and fruit. The company has a strong client base in Europe, particularly in Northwest and Central Europe, but also serves clients globally – Oerlemans exports to more than 40 countries worldwide. The company, which operates with an own brand (‘Oerlemans Foods’) and supports private labels of larger retailers, has around 700 employees spread over four locations in the Netherlands (Waalwijk) and Poland (an office in Warsaw and two production facilities).

“The acquisition of Oerlemans allows us to broaden our products and enhance our services to both our current and new clients,” said Javier Virto, CEO of Virto. Similar to Oerlemans, privately-held Virto specialises on the production and distribution of deep-frozen vegetables, mainly for the retail, food service and industrial sectors. The company operates with commercial offices in eight countries and ten specialty centres, of which nine are in Spain (three in Navarra, two in Murcia, Badajoz, Segovia, La Rioja, Zaragoza) and one in Portugal. The 1984-founded food company produces an extensive range of vegetables, pulses, mixes, rice, pasta, cereals and vegetable-based dishes.

Spain’s Virto Group acquires Dutch food company Oerlemans

Raoul Vorage, the CEO of Oerlemans, describes Virto as a market leader in the area of “quality and innovation”, adding that the joining of forces is a win-win for both parties. “This transaction will secure the availability and quality of fresh raw materials as well as increase the variety and volume of the new combination’s product range. Additionally, the close proximity to the Rotterdam and Gdansk harbours will allow the Group to further improve its logistics capabilities.”

For Oerlemans, the sale – 100% of the shares have been purchased by the Spaniards – comes around a year after it sold its potato division to Dutch company Lamb Weston / Meijer. The deal, orchestrated by H2, the private equity firm which holds a majority stake in the company, was closed with the aim of allowing Oerlemans to focus exclusively on its fresh frozen food activities.

M&A advisors

Vorage and his management team, and H2, were throughout the deal process advised by M&A experts from Squarefield, a corporate finance advisor exclusively focused on the food and agriculture industries (transaction support), Houthoff, a Dutch law firm (legal advisory); and Deloitte, which provided financial due diligence through its Corporate Finance wing. At the Spanish side of the table, deal advisory support was entrusted to MBCF, a Netherlands-based M&A consultancy (transaction support); CMS, a law firm with 70 offices globally (legal advisory); and KPMG, one of the Big Four global accounting and consulting firms (financial due diligence).

According to a recent report by KPMG, deal activity in the Netherlands has reached its highest point in a decade.

Firms struggling with turning M&A deals into equity value

18 April 2019

At a time when merger & acquisition activity is on a high, new research highlights that a majority of deals closed aren’t in fact contributing to equity improvements. 

To come to their conclusion, researchers at Willis Towers Watson and Cass Business School analysed the performance of all deals closed in the first quarter of this year with a deal value of above $100 million. For all those deals, 180 in total, the share price of the acquirer was tracked, and benchmarked against an index (MSCI World Index) which monitors equity performance across 20+ developed countries. 

The analysis found that across all regions globally, deals on average had a negative result on the equity value of the acquiring party. Buyers in North America and Asia-Pacific in particular struggled with value creation from their acquisitions. In the US and Canada, companies that were involved in a takeover or merger had a negative performance of 10.1 percentage points compared to the North American index. Asia Pacific buyers lagged 5.0 percentage points behind their regional index. 

Globally, the average stood at 5.4 percentage points behind the index. “The international M&A market as a whole is showing disappointing results, on the back of a volatile transaction climate and global political uncertainty, from trade wars to increasing protectionism,” said Gabe Langerak, a Dutchman who leads Willis Towers Watson’s Mergers & Acquisitions practice for Western Europe.Firms struggling with turning M&A deals into equity valueEurope however bucks the trend and is the only region where large mergers & acquisitions in the first quarter of 2019 had a positive impact on the stock prices (2.8%). Langerak: “The relatively stable – or less unstable – political and economic situation seems to turn out beneficial, and as a result European companies have outperformed their international peers.” It is not just a short term catch – the continent has been performing better for years, with the three-year average at 5.1% above the index. 

Striking, according to the researchers, is that international deals are outperforming national deals. For example, cross-border transactions score 0.9% higher than the index, while cross-regional deals even surpass the index by 3.1%. 

While the ‘financial’ performance of M&A deals is by no means impressive, there are however little signs of deal activity to slow in 2019. “Growing cash reserves, technological disruption and the stagnating growth of emerging markets are still pushing companies towards the M&A market,” explained Langerak. A recent report by Bain & Company found that global merger and acquisition activity spiked last year, growing from $2.9 trillion in 2017 to $3.4 trillion in 2018

The role of private equity, which accounts for a large share of deal activity, is another force lifting M&A activity. Investors are cash rich, and face pressures to spend the money in order to help their backers (mostly institutional investors and family offices) reap better than market average returns. According to one estimate, private equity now sits on $1.7 trillion of funds that is available but can’t be invested (‘dry powder’), with investors struggling with higher multiple and a limited supply of top, well priced targets. “As potential candidates now seem more expensive than during previous M&A peaks, such as in 1999 and 2008, it is more difficult than ever to close successful deals.” 

Langerak concludes with a tip for deal makers; “For M&A experts that want to make a move, it is key to focus on selecting the right acquisition candidates. Proper preparation, integration and the right people are essential to gain the right insights before taking a leap.”