Numico to buy Italian baby food maker Mellin

Related tags Baby food

Dutch clinical and infant nutrition group Royal Numico has signed
an agreement to acquire Mellin, a leading Italian baby food
company, from the Findim group, for €400 million in cash and

Since selling off its supplement activities, Numico has focused on its baby food and clinical nutrition businesses, looking to gain leading positions in certain markets for its baby food business through add-on acquisitions.

Its first acquisition was Valio's baby food business in May last year. Mellin gives Numico the number two position in the Italian baby food market and a good base to drive growth in this underdeveloped and fragmented market.

The business, which generated revenues of €130 million with an EBITA of €29 million in 2004, has particularly strong positions in the weaning food categories and the fast growing grocery channel.

It has significantly outperformed the market growth in recent years, with growth of 10 per cent CAGR giving it a 5 point market share gain during the past three years. It now holds a 21 per cent share of the Italian baby food market.

Goldman Sachs has forecast strong returns for Numico's new strategy, which eliminates much of the pricing pressure from retailers.

"Given that the clinical nutrition business has no exposure to the mass market retailers and that retailer brand has less than a 5 per cent share in the western European baby food market, we believe Numico is better placed than its peers to deliver growth despite…industry pressures [such as static consumer markets and consumers trading down],"​ say the analysts.

Jan Bennink, CEO of Numico​, called the acquisition an important step forward for the firm's baby food strategy in Western Europe.

"Mellin complements and significantly strengthens our existing operations in terms of product range, channel presence and market position,"​ he said.

Completion is expected in the second quarter of 2005 and is conditional upon shareholder and regulatory approvals. The transaction is expected to be accretive in the first year.

Numico will appoint Marco Fossati, chairman and CEO of Findim and STAR, to Numico's supervisory board after completion.

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