Darling to Buy Vion Rendering Division for $2.2 BillionDavid Welch, Matthew Campbell and Shruti Singh
Darling International Inc., the largest U.S. recycler of meat-production byproducts and restaurant cooking oils, agreed to buy a similar business from Vion Food Group Ltd. of the Netherlands for about 1.6 billion euros ($2.2 billion).
The purchase of Vion Ingredients is expected to close in January, subject to regulatory approvals and worker consultations, Darling said in a statement today. The acquisition, which according to data compiled by Bloomberg will be Darling’s largest, will give the Irving, Texas-based company a business that operates through 58 subsidiaries on five continents. Vion Ingredients takes slaughterhouse byproducts such as gelatin, fats and proteins to make products for pharmaceuticals, food, cosmetics and energy.
“We view the accretive deal as very positive as the acquisition diversifies Darling’s portfolio geographically while adding scale,” Farha Aslam, a New York-based analyst for Stephens Inc. who recommends buying the shares, said in a report today. She estimated the value of the deal at 7 to 8 times trailing earnings before interest, tax, depreciation and amortization and 0.9 times trailing sales.
Darling International’s agreement follows other deals announced this year including Shuanghui International Holdings Ltd.’s $4.7 billion purchase of Smithfield Foods Inc., the world’s largest hog and pork producer. Acquisitions of meat-industry companies announced globally in 2013 total $12.3 billion, the biggest volume since at least 2008, according to data compiled by Bloomberg.
Darling also announced two takeovers in August: its $613 million purchase of Maple Leaf Foods Inc.’s animal-rendering unit and the $120 million acquisition of Terra Renewal Services Inc.’s cooking-oil collection business.
The U.S. company’s shares rose 2.3 percent to $20.80 at the close in New York. They have advanced 30 percent this year, giving the company a market capitalization of about $2.5 billion.
Darling was advised by JPMorgan Chase & Co. on the takeover, which will be financed through a combination of debt and equity and will immediately add to earnings per share, according to the company. JPMorgan, Goldman Sachs Group Inc. and BMO Capital Markets are providing financing. Darling’s legal counsel was K&L Gates LLP and Clifford Chance LLP.
Vion, based in the Dutch city of Eindhoven, is selling or winding down some assets as it focuses on its food divisions at home and in Germany. The company sold its U.K. food operations to 2 Sisters Food Group Ltd. for an undisclosed sum in March and one month later closed its lamb-processing business, Welsh Country Foods.
Vion hired Bank of America Corp. in June to help sell its rendering business. CVC Capital Partners Ltd. and Permira Advisers LLP, two of Europe’s largest private-equity firms, made the second round of bidding for the Vion unit along with Darling, Apollo Global Management LLC, Advent International Corp. and Saria Bio-Industries AG, people familiar with the process said in August.
Vion Ingredients, which was established in 1930 and is based in Son en Breugel in the Netherlands, employs about 5,700 people, according to the statement. Sales were about 1.6 billion euros and earnings before interest, taxes, depreciation and amortization were about 200 million euros in the 2012 financial year.
Dirk Kloosterboer, CEO of Vion Ingredients, will continue to lead the business. He will also be appointed as chief operating officer at Darling and will join the company’s board.