The Nordic foods and drinks group Arla has launched a sales process to sell its Danish fruit juice subsidiary Rynkeby Foods AS. The decision is not unexpected, as Arla’s management had ordered a strategic review of Rynkeby Foods’ business in June. This included a valuation indicating price expectations should Arla divest the juice business.
The next stage in the process will be to identify potential buyers that do not just have the cash to acquire Rynkeby Foods, but the capability to develop and expand the company further, said Povl Krogsgaard, Arla’s Deputy CEO.
Arla expects to complete the process in finding a suitable a buyer by the end of the first half of 2016. Established in 1994, Arla acquired Rynkeby Foods in 1998 from MD Foods.
Rynkeby Foods was originally formed following a merger of Ripella A/S and Rynke A/S. Ripella was a wholly owned subsidiary of MD Foods while Rynke A/S formed part of the Carlsberg group. Both MD Foods and Carlsberg each held 50% of the shares in Rynkeby Foods before MD Foods later bought out Carlsberg’s interest.
Based in Ringe, Rynkeby Foods reported sales of €150 million in 2014. The company is currently the biggest manufacturer of breakfast juice and fruit flavoured drinks in the Nordic countries, producing over 150 million litres of beverages annually. Although its product exports are growing, Denmark and Sweden remain the company’s two primary markets.
“Arla has, over the past two decades, divested subsidiaries that do not have a direct link to dairy production. This was done to focus on our core business. Rynkeby is the last remaining subsidiary in the Arla Group not linked to milk, and it is our assessment that the Rynkeby business will be better suited under new ownership that can take the company to the next level in its future development,” said Krogsgaard.
The process has already reached the stage where Arla is approaching potential buyers, said Krogsgaard. “We are now in the process of identifying the right buyer and the best offer. We expect this process to be concluded by the end of the second quarter next year,” said Krogsgaard