CSM Global has announced plans to sell both its European and North American bakery businesses, to focus on bio-based ingredients.
Following a business review – which commenced last Autumn – the firm said it intended to transform into a bio-based ingredients company, by focusing on the growth of its Purac and Caravan Ingredients businesses. It said its bakery supplies businesses require funding to participate in market consolidation, and that it does not have sufficient funds to exploit the growth in both bakery supplies and bio-ingredients.
Shares in the world’s largest bakery products maker leapt as much as 30 percent on Monday as analysts said the sale could raise as much as 1.3bn euros (£1bn) to pay down debt and return to shareholders
The Dutch group said that it sees bio-ingredients as offering more attractive opportunities in “value-creating, high growth activities”.
“CSM therefore proposes to start a major divestment process for the North American and European bakery supplies businesses that will enable the group to redeploy capital into activities better able to deliver higher growth and enhanced shareholder value,” explained the firm.
In February this year, British Baker reported CSM’s plans to shake-up its bakery supplies Europe (BSEU) business after sales continued to fall on the back of changing trade patterns.
The firm has seen a continued trend away from artisanal production in Europe, which has hit the ingredients side of its business, where in-store bakery and out-of-home consumption are growing.
Purac is a biotechnology company, focused on lactic acid and its derivatives.
Caravan Ingredients has leading positions in the North American markets for ingredients including lactic acid-based emulsifiers, functional blends containing enzymes, and fortification ingredients. Approximately 40% of its sales are in non-bakery applications.
Analysts said potential buyers included Mexico’s Grupo Bimbo (BIMBOA.MX), the world’s largest bread maker, Swiss-based specialty baker Aryzta (ARYN.I) (ARYN.S) and Belgian bakery group Puratos, as well as private equity firms.