Food industry merger looks like making a national ‘champion’

Greece’s biggest dairy group, Delta Holdings, yesterday unveiled plans to shed its ice-cream division and form the country’s largest food company through a merger with snack food maker Chipita International. The merger will also include the absorption of two of Delta’s listed subsidiaries, fast-food chain Goody’s and General Foods, which markets frozen items. Delta Ice Cream, which has a large market share in neighboring Balkan countries, is to be sold to Nestle Hellas. Chipita is active in Cyprus, Russia, Ukraine and Mexico. «The merger will create a large Greek market leader with the top food brands, and with significant size in Europe. The consolidated company will be the seventh-largest Greek industrial company, the 16th-largest Greek company and the 35th-largest food company in Europe,» said Delta Holdings President Dimitris Daskalopoulos. The merger is expected to be finalized by July 2006, when the shares of the new company will be launched on the Athens bourse. The group will adopt the provisional name BrandCo until the adoption of a new corporate identity. Seventy percent of the present combined turnover of the constituent members of BrandCo, which is projected at 850 million euros for 2005, is generated in Greece and 30 percent abroad. Net profits, after tax and minority rights, are estimated at 38 million euros. Daskalopoulos did not rule out the addition to the group of other food companies which are market leaders in products not included on BrandCo’s roster. The basic shareholders of the companies to merge will hold a combined 36.9 percent in BrandCo, institutional investors 28.6 percent, retail investors 28.9 percent and other minority investors 5.6 percent. Delta also said it had agreed to sell its 96.53 percent share in its ice-cream division to Nestle Hellas for 240 million euros. The price includes the company’s 109-million-euro debt. «The acquisition of Delta Ice Cream is an important investment which shows Nestle’s confidence in the Greek economy and is part of its global strategy to focus on ice cream where it is an international market leader,» said Nestle Hellas’s CEO Evangelos Kalousis. He added that Delta Ice Cream can enhance its export performance through Nestle’s extensive multinational network. Delta Ice Cream reported a group turnover of 123 million euros and net profit after tax and minorities of 1.4 million euros in 2004. Nestle Hellas, which operates four factories in Greece, is Greece’s most profitable food company, accounting for about a quarter of the total profits of the entire food manufacturing sector. Its turnover in 2004 was 350 million euros.