KraftHeinz mandates JPMorgan to sell Italian baby food unit, sources say

Provided by Mergermarket

Kraft Heinz [NASDAQ: KHC] has mandated JPMorgan to sell its Italian baby food division Plasmon, according to three sources familiar with the situation.

A first source said that Plasmon has over EUR 50m in EBITDA, while the second said that it has revenue in the region of EUR 200m and is highly profitable. Information memoranda will be distributed shortly, the third source said.

JPMorgan and Kraft Heinz did not comment.

The third largest North American food company, which is co-headquartered in Chicago and Pittsburgh, has embarked on a new wave of divestitures as part of efforts to deleverage after posting dismal 4Q18 results, according to recent media reports. In the US, it is notably reported to be considering a sale of its Maxwell House coffee business, which generates USD 400m in EBITDA.

Its Italian baby food unit, based in the city of Latina, is known for its Plasmon biscuits, made of dried milk and fortified with vitamins and minerals, which have been produced since the start of the 20th century. It also produces the Nutrimune baby formula.

Plasmon’s foods are produced at Heinz’s production plant in Latina, in which it invested EUR 20m in 2016, according to an Italian media report. The Latina plant also produces food products from brands such as Biaglut, Nipiol, Dieterba, Cuore di Natura, and Aproten. Products are shipped from Latina to 41 countries globally, the report said.

Plasmon was previously on the radar for a potential sale long before the 2015 merger of Kraft and Heinz, when in 2006 activist investor Nelson Peltz called on HJ Heinz to cut costs and sell non-core assets, including the Italian baby food unit. At the time, a Heinz spokesperson told this news service a sale was out of the question, describing Plasmon as one of its most profitable global businesses.

Global baby-food deals since 2010 – Mergermarket data

Active bidders in the baby food sector (2010 – 2019)

Bidder company Target Company Relationships (buy-side) Financials (USD)

Groupe Lactalis S.A
.
(France)
Aspen Pharmacare Holdings Limited (Global Nutritional Business) (South Africa) FA: Rothschild & Co
LA: Dentons; Stibbe
DV: 862m
Turnover: 226m (2017)
Nutrition & Sante SAS (Infant and baby nutrition unit) (France) Turnover: 23m (2009)

Danone S.A.

(France)
Wockhardt Limited (baby nutrition business)
(India)
FA: Lazard
LA: Freshfields Bruckhaus Deringer; Platinum Partners
DV: 355m
Nurture Inc. (90% stake)
(USA)
LA: Greenberg Traurig DV (est.): 250m
Turnover: 62m (2012)
Health and Happiness (H&H) International Holdings Limited
(China)
Adimil (Changsha) Nutrition Products Ltd (China) DV: 58m
BBB SAS
(France)
LA: Gide Loyrette Nouel Turnover (est.): 25m (2017)

by Giovanni Amodeo in London and Micaela Osella in Milan, with analytics by Mohamed Rais

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