CSM to focus on natural products after divestments
By Sara Webb
AMSTERDAM (Reuters) - Dutch food ingredients company CSM CSMNc.AS has put its bakery supplies unit up for sale to focus on more profitable food and chemical products based on natural ingredients such as sugar.
The world's largest bakery products supplier had come under pressure to restructure and improve its performance as it was hit by weak consumer spending in Europe and North America and soaring prices for ingredients such as wheat and sugar.
Analysts said the disposals could raise up to 1.3 billion euros ($1.7 billion) and cited as potential buyers Mexico's Grupo Bimbo BIMBOA.MX, the world's largest breadmaker, Switzerland-headquartered specialty baker Aryzta ARYN.I (ARYN.S: Quote), and Belgian bakery group Puratos, as well as private equity firms.
CSM did not indicate whether it was in talks with potential buyers for the business, which makes muffins and pastries mainly for European and U.S. retailers, but said it expected to have made "significant progress" with the planned divestments by early 2013.
"The divestment is a major announcement for CSM, one that was eventually expected, but clearly not this quickly," SNS Securities said in a research note.
Others said that given the difficult economic conditions in Europe and the United States, and fragile consumer confidence, there was limited scope for growth in the sector except through acquisitions.
"There's not a lot of intrinsic growth in the market," said Robert-Jan Vos, analyst at ABN AMRO, which he said meant there would be "appetite in the industry" to buy CSM's assets.
CSM said proceeds from divesting its European and U.S. bakery supplies business, which has annual revenue of 2.4 billion euros, will be used to pay down debt, make bolt-on acquisitions, and return funds to shareholders. It has appointed Rothschild ROT.UL as its adviser. Continued...